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235623 Resource 128460 120646 120646 1246539088302 1246539088302 Controlled China Takes the Long View

Chinese quietly set about forex reserve diversification

Earlier this year, China made a rather strident call for a <a href="item/229263" target="_blank" title="global reserve currency, yuan, forex reserve, currency, forex trading, currency swap, China">global reserve currency</a>. This call was for the world to use International Monetary Fund "special drawing rights." Most countries scoffed at the notion, and, having planted the idea, China backed off. Even recently, China expressed its current support of the U.S. dollar as a reserve currency. But China isn't one to just give up. China is patient, and takes the long view. Earlier this year, China arranged a currency swap with Argentina. Additionally, China is looking to have its major finance centers settle loans in yuan. There is even an agreement with Hong Kong in the works for exchanges in the yuan. Clearly, China is looking forward to a day (and it may be two or three decades in the future) when the U.S. dollar may not be the dominant reserve currency. <a href="http://www.forexblog.org/2009/07/forex-reserve-diversification-builds-slowly.html" target="_blank" title="global reserve currency, yuan, forex reserve, currency, forex trading, currency swap, China, U.S. dollar">The Forex Blog offers this on the gradual change</a>: <blockquote> Even China has stated that its reserve policy will not feature any sudden changes. In sum, “It seems safe to say that the Chinese are pursuing a rather <a target="_blank" href="http://www.google.com/hostednews/afp/article/ALeqM5gTN68764cFOIYx4TJQFC5aNehKvA">logical path</a>. They will continue to accumulate dollar reserves, as doing so fits their three-adjective criteria [liquidity, safety and returns], while also pushing for international acceptance of an alternative to the dollar in a new global currency.” </blockquote> This is smart thinking. China has been taking one solid step at a time as it builds toward economic superpower status. The country has been diversifying in recent months, buying energy concerns and looking to European investments. While America's dominance has certainly lasted quite a while, China is looking toward the day when it make take her place. <blockquote> </blockquote> 9 application/xml false China currency currency swap Forex Blog forex reserve forex trading global reserve currency U.S. dollar yuan Currency News and Information Forex trading and more http://www.fx360.com/?aid=5704 Mozilla/5.0 (Macintosh; U; Intel Mac OS X 10.5; en-US; rv:1.9.0.11) Gecko/2009060214 Firefox/3.0.11 GTB5 127.0.0.1 127.0.0.1 mmarquit 63.248.48.57 false true false false true 128460 blog blogsite/GFTForex/web