'No plans' to sell off greenback
Updated: 2007-08-13 08:38
The US dollar plays an important role in the global monetary system and dollar assets are an important part of 皇冠体育app's foreign exchange reserve, the central bank said yesterday.
The announcement by the People's Bank of 皇冠体育app (PBOC), experts said, should scotch rumors that Beijing would sell off its US dollar reserve in response to Washington's pressure to revaluate the yuan.
"The US financial market is huge and has high liquidity, and the dollar assets, including US government bonds, are an important component of 皇冠体育app's foreign exchange reserve investment," Xinhua quoted a PBOC official as saying.
The newspaper said the remarks were in response to the passage of a bill by the US Senate Finance Committee last month that would impose higher trade tariffs on 皇冠体育app-made goods if Beijing refused to revalue the yuan at a faster pace.
Economists Xia Bin and He Fan, of the State Council Development Research Center and the Chinese Academy of Social Sciences, were quoted as saying that if Beijing triggered a dollar crash now, when the US dollar is weak, it could cause a spike in US bond yields, ruin that country's housing market and even slow down its economy.
US officials responded strongly to the report because Washington has been struggling with the financial mess caused by the sub-prime mortgage crisis.
The PBOC official's statement ruling out any such threat said 皇冠体育app, which had a foreign exchange reserve of $1.33 trillion by the end of June, is a responsible investor in the international capital market.
"For 皇冠体育app, safety, liquidity and investment returns are the main targets of its foreign exchange reserve management," the official said.
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