Purchase of US treasuries to continue
13 March 2007
China will keep buying US Treasuries after a new state investment agency begins operations to help the nation manage its US$1.07 trillion foreign-exchange reserves, according to central bank vice governor Wu Xiaoling, state media reported. The government has said that it wants to invest its reserves to support an economy that grew 10.7% in 2006, without causing large swings in global markets. The dollar slumped 1% against the euro in the week ended Nov. 11 after central bank governor Zhou Xiaochuan said he plans to diversify holdings, as any movement by China out of its dollar assets would have a tremendous impact on the US currency. A timeframe for setting up the new reserves agency has yet to be set.