Bottomfeeder 244 Posted March 11, 2007 Share Posted March 11, 2007 How will this affect the markets and the US Dollar? Of course US Dollar will take huge hit. Jin gave no details of how the Cabinet-level company might invest the reserves, nor did he say what portion of the reserves might be channeled through the company or when it would start to operate. Spokespeople for Jin's ministry and the central bank and foreign currency regulator declined to give any other details.U.S. Treasury Secretary Henry Paulson, in an interview this week on the U.S. television network ABC, rejected suggestions that changes in Chinese bond purchases could affect the United States. Paulson said Beijing's entire holdings represent the equivalent of less than a single day's trading in Treasuries on global bond markets. Chinese economists and media reports have suggested China might adopt more unusual investment approaches, ranging from stockpiling oil and other raw materials to spending more on social programs in order to encourage Chinese consumers to spend more and reduce dependence on exports. The surge in money flooding in from abroad forces the central bank to drain billions of dollars from the economy every month by selling bonds in order to reduce inflationary pressures. The precise composition of China's foreign currency reserves is a secret. But economists believe that as much as 75 percent is believed to be in U.S. dollar-denominated instruments, mostly Treasuries, with the rest in euros and a small amount in yen. Stephen Green, chief economist at Standard Chartered Bank in Shanghai, calculated that last year the central bank made a $29 billion profit on its Treasury holdings after paying interest on its own bonds and other expenses. http://news.yahoo.com/s/ap/20070309/ap_on_...eign_reserves_7 Is the bubble about to burst on the US Dollar? Yes. He, he, he... Humpty Dumpty.... Link to comment Share on other sites More sharing options...
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