Excerpt from: Forex News
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| December 30, 2008 | | Chinese foreign exchange reserves fall | Right now, China has the largest currency reserves in the world. Yuan appreciation has encouraged speculators to invest in China, and that has helped matters along.
Now, though, the Chinese government is thinking about yuan depreciation, and is reluctant to let the yuan continue its course of appreciation. Bloomberg reports on what yuan depreciation is likely to do in terms of foreign exchange reserves:
“A large chunk of speculative capital would have already
gone in the current quarter as it’s clear to market watchers
that the government doesn’t want to appreciate the yuan any
more,” Chan said in an interview today, confirming details of
the report. “Other speculators will gradually move out next
year after losing confidence.”
It is important to note that individuals cannot trade the Chinese yuan (also called the renminbi) on the FX market. However, the movements of the yuan do affect other currencies on the FX market.
| Topic Tags: currencies, currency reserves, foreign exchange reserves, FX market, renminbi, yuan appreciation, yuan depreciation | |
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