China to assess gold, forex strategy
Friday, 12 March 2010
BEIJING, Mar 11 (Commodity Online): China's parliament, the National People's Congress (NPC) is likely to adopt a blueprint regarding country's gold and forex positions.
China's 2010 economic blueprint, which was officially unveiled at the plenary's opening, likely to set the country's target growth rate at the proverbial 8 per cent.
China has been quietly increasing its gold reserves in an apparent effort to hedge the weakening value of the dollar and stabilise the value of its massive foreign exchange reserves.
One of the key issues that Chinese leaders will have to tackle is whether to let the yuan rise to help restructure the domestic economy and rebalance the global economy.
If they decide to allow the yuan to appreciate against the dollar and other currencies, gold may increasingly become an attractive alternative to include within the basket of China's reserves.
As one of the world's largest holders of US Treasury bills, Chinese leaders have become more vocal in expressing their concerns over the United States' fiscal discipline and in calling for an alternative international reserve currency.
China increased its gold reserves by 76 per cent in six years (2003) to 1,054 tonnes in 2009. China's present gold holdings make up about 1.2 per cent of its total forex reserves.
US gold reserves totaled 8,133.5 tonnes in September 2008, accounting for 76.5 per cent of its total forex reserves. Japan's 765.2 tonnes accounted for 1.9 per cent of its forex reserves.
While China bought nearly 50 per cent of the total gold purchases by central banks in 2009, the volume of China's gold reserve in terms of its forex reserves only ranks fifth in the world, and is well below the global average.
China's 2010 economic blueprint, which was officially unveiled at the plenary's opening, likely to set the country's target growth rate at the proverbial 8 per cent.
China has been quietly increasing its gold reserves in an apparent effort to hedge the weakening value of the dollar and stabilise the value of its massive foreign exchange reserves.
One of the key issues that Chinese leaders will have to tackle is whether to let the yuan rise to help restructure the domestic economy and rebalance the global economy.
If they decide to allow the yuan to appreciate against the dollar and other currencies, gold may increasingly become an attractive alternative to include within the basket of China's reserves.
As one of the world's largest holders of US Treasury bills, Chinese leaders have become more vocal in expressing their concerns over the United States' fiscal discipline and in calling for an alternative international reserve currency.
China increased its gold reserves by 76 per cent in six years (2003) to 1,054 tonnes in 2009. China's present gold holdings make up about 1.2 per cent of its total forex reserves.
US gold reserves totaled 8,133.5 tonnes in September 2008, accounting for 76.5 per cent of its total forex reserves. Japan's 765.2 tonnes accounted for 1.9 per cent of its forex reserves.
While China bought nearly 50 per cent of the total gold purchases by central banks in 2009, the volume of China's gold reserve in terms of its forex reserves only ranks fifth in the world, and is well below the global average.