China’s Wen says forex move won’t harm dollar

Wen Jiabao, China’s premier, sought to reassure global currency markets about the new agency being established in Beijing to invest a portion of the country’s $1,000bn-plus in foreign exchanges reserves.

He acknowledged that China held large amounts of US-dollar assets, which he said were bought “on the basis of mutual benefit.”

“I can assure you that by instituting such a foreign exchange reserve investment company, it will not have any adverse impact on US dollar-denominated assets,” he said.

Mr Wen’s generalised reassurance on the US dollar is also in China’s self-interest, as any sell-off in the greenback would cause huge capitals losses for Beijing’s existing holdings. Read original article