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March 13th 2007

China FX Firm to Manage $200 Billion+

Several months ago, China announced that it would sponsor the creation of several state-owned investment firms that would be charged with managing China’s ever-growing stock of foreign exchange reserves. This week, China unveiled further details, indicating that the first one of these investment firms will be capitalized with $200-250 Billion in assets. This firm will use the proceeds of a bond offering for such an amount to buy forex reserves directly from China’s Treasury, with the explicit goal of earning a return in excess of the interest it must pay on the bonds. In order to achieve this, the firm will almost be forced to invest in non-USD denominated assets, which would surely exert downward pressure on the USD. The Shanghai Daily reports:

The State Administration of Foreign Exchange will run the daily operation of the country’s forex reserves, while the new forex investment company, under the State Council, will run the investment side.

China FX Firm to Manage $200 Billion+

The State Administration of Foreign Exchange will run the daily operation of the country’s forex reserves, while the new forex investment company, under the State Council, will run the investment side.

Read More: China’s 1st forex firm to issue US$200b bonds

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Posted by Adam Kritzer | in Chinese Yuan (RMB), Investing & Trading | No Comments »

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