Apr 28, 2011 03:21 PM

China's Forex Cache: Too Much of a Good Thing


The People's Bank of China is mulling a new strategy for managing – through diversified investment – its enormous cache of foreign currency and bonds, whose total value exceeded an all-time record US$ 3 trillion in late March.

The amount of U.S. Treasury bonds, dollars, euros and other currency held by the Chinese government is "really too much," said the bank's governor, Zhou Xiaochuan, at an April 18 financial forum at Tsinghua University.

Zhou's comments at least in part reflected international market pressure on the U.S. dollar, which analysts say may comprise 70 percent of the China's foreign holdings. Euros, pounds and yen are also mixed into the reserves, details of which have never been publicized by Beijing.

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