The dollar fell to yet another 14-month low overnight, possibly on news of better-than-expected growth in South Korea, or maybe due to comments from a top Chinese banker and academic urging China to diversify away from the greenback, and to buy more euros and yen.
Shanghai Daily: China should increase its holdings of euro and yen in its foreign exchange reserves, said a researcher with the People’s Bank of China.
The United States dollar should retain the largest weight in the reserve, but with a smaller proportion, said Zhou Hai in an opinion piece in today’s Financial News. The newspaper is affiliated with the central bank.
“The holdings of euro and yen should be increased to reflect China’s growing trade with the European Union and Japan,” Zhou wrote. “China should improve the yuan’s exchange-rate mechanism and use monetary policy tools reasonably to lessen the need for passive purchase of foreign currencies.” Read the whole thing >
If anyone has a copy of the article, we’d love to see it.
Already Zhou Hai is backtracking a little. He already told Reuters that the article was merely his “personal view.”