Explore posts in the same categories: China,
debt,
free trade
This entry was posted
on September 5, 2007 at 12:46 pm and is filed under China, debt, free trade.
You can subscribe via RSS 2.0 feed to this post's comments.
You can comment below, or link to this permanent URL from your own site.
September 5, 2007 at 11:28 pm
This just in from our friends at Briefing.com:
00:12 Is China quietly dumping US Treasuries? – Telegraph
Telegraph reports a sharp drop in foreign holdings of US Treasury bonds over the last five weeks has raised concerns that China is quietly withdrawing its funds from the United States, leaving the dollar increasingly vulnerable. Data released by the New York Federal Reserve shows that foreign central banks have cut their stash of US Treasuries by $48 bln since late July, with falls of $32 bln in the last two weeks alone. “This comes as a big surprise and it is definitely worrying,” said Hans Redeker, currency chief at BNP Paribas. “We won’t know if China is behind this until the Treasury releases its TIC data in November, but what it does show is that world central banks are in a hurry to get out of the US. They don’t seem to be switching into other currencies, so it is possible they are moving into gold instead. Gold is now gaining momentum across all currencies and has broken through resistance at 500 euros,” he said. While the greenback has been resilient over recent weeks – even regaining something of a ’safe-haven’ role as banks scrambled to buy the currency to cover dollar debts – most experts believe that America’s $850 bln current account deficit will eventually cause the dollar to resume its relentless slide. David Powell, an economist at IDEAglobal in New York, pointed the finger at Beijing as the main suspect in the sudden bond flight this summer. In a client note entitled “Has China started to dump US Treasuries?”, he said the sales appear to coincide with early moves by Beijing to launch its new $300 bln sovereign wealth fund. The scheme is part of the government’s plan to diversify it $1,340 bln reserves from bonds (mostly in the US) to a broader portfolio of investments and a better yield.