Forex safe from yuan's rise: SAFE
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China.org.cn, July 21, 2011
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China holds a record US$3.2 trillion in forex reserves. |
An appreciation of China's yuan, will not directly incur a loss to the country's record US$3.2 trillion foreign exchange reserves, said China's foreign exchange regulator Wednesday.
Value of the forex assets only changes when the assets are converted to yuan, the State Administration of Foreign Exchange (SAFE) said in a statement on its Web site.
"Currently China does not need to repatriate forex reserves massively," it said.
"The changes in yuan's exchange rate against dollar only reflect a change to the book value," it said. "it is not an real loss and does not affect real purchasing power of the forex reserves."
Government data shows China's forex reserves totaled nearly $3.2 trillion by the end of June.
The statement echoed the stance the SAFE voiced in May, which was made after a government researcher said in an essay that China likely suffered an accumulated loss of around $271 billion on foreign exchange reserves since 2003 because of the yuan's appreciation.
However, excessive growth and size of foreign exchange reserves pose challenges to the management, SAFE said, adding it will accelerate reform of the formation mechanism of the yuan exchange to promote an international balance of payment.
SAFE also urged the US government to take "concrete and responsible measures" to boost confidence in the international financial market and respect and secure investors' interests.
The urge came after credit rating agencies including Standard & Poor warned the US government about its swelling debt.
China is currently the largest holder of US debt followed by Japan and Britain, with US$1.153 trillion in holdings by the end of April.
SAFE also pointed in the statement that using China's forex reserves to purchase global commodities, such as gold and oil, would take a toll on domestic consumption and economic development as the move would drive up the prices of commodities.
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