Sorry, But The Story About China Dumping Eurozone Bonds Makes No Sense

Earlier today, the FT reported that China’s State Administration of Foreign Exchange (SAFE) was reviewing its $630 billion in Eurozone holdings, with an eye towards dumping them (maybe).

The news helped contribute to the dive in the euro, and subsequent late-day fall in stocks.

The problem is… the story doesn’t make any sense.

If anything, China has been in the market buying euros in hopes of propping up their currency.

Why? Because Europe is China’s biggest export market, and a decline in the Eurozone will hammer its exporters.

All of this is reminiscent to when the US dollar was getting hammered, and there were countless warnings about China dumping our Treasuries. It didn’t happen, and it’s not going to happen this time.

china euro

Photo: Waverly Advisors

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