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Dollar falls fast and far, many say Chinese banker is to blame

The dollar plummeted overnight to a 14 month low. While some suspect that the news of better-than-expected growth in South Korea may be at fault, many are placing the blame on comments from a top Chinese banker. Although now Zhou Hai, in an interview with the folks at Reuters, said that he was merely expressing his “personal view” the banker earlier had made comments urging China to diversify from the dollar and buy more euros and yen.

Shanghai Daily: China should increase its holdings of euro and yen in its foreign exchange reserves, said a researcher with the People’s Bank of China.

The United States dollar should retain the largest weight in the reserve, but with a smaller proportion, said Zhou Hai in an opinion piece in today’s Financial News. The newspaper is affiliated with the central bank.

“The holdings of euro and yen should be increased to reflect China’s growing trade with the European Union and Japan,” Zhou wrote. “China should improve the yuan’s exchange-rate mechanism and use monetary policy tools reasonably to lessen the need for passive purchase of foreign currencies.” Read the whole thing >

 

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