Saturday, April 11, 2009

China Foreign Exchange Reserves at $1.954 Trillion

China's central bank said today that its foreign exchange reserves rose 16 percent year-on-year to $1.9537 trillion through the end of March.

China's reserves increased by $7.7 billion in the first quarter - $146.2 billion less than the same period last year, the People's Bank of China said in a notice on its Web site.

It is believed that China holds up to 70 percent of its foreign reserves in U.S. dollar-denominated assets, including Treasury securities.

How much more dollar denominated assets China will absorb is the big question. Any back off in China buying will result in a decline of the dollar on foreign exchange markets and higher interest rates in the U.S.

At some point, it will happen.

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