Dinar Daily
Would you like to react to this message? Create an account in a few clicks or log in to continue.

Get Daily Updates of the NEWS & GURUS in your EMAIL
CHECK YOUR EMAIL for VERIFICATION

Enter your email address:

China Continues to Cut US Debt for Yuan's SDR Entry DinarDailyUpdates?bg=330099&fg=FFFFFF&anim=1

China Continues to Cut US Debt for Yuan's SDR Entry

2 posters
Post new topic   Reply to topic

Go down

China Continues to Cut US Debt for Yuan's SDR Entry Empty China Continues to Cut US Debt for Yuan's SDR Entry

Post by Purpleskyz Mon Sep 19, 2016 10:12 am

Belt, Road initiative creates pathways to UN 2030 agenda

China continued to cut its holdings in US Treasury securities in July, which experts mainly attributed to preparations for the yuan's inclusion in the International Monetary Fund's (IMF) Special Drawing Rights (SDR), effective October 1.

China currently held about $1.22 trillion worth of US Treasury securities as of the end of July, its lowest level since January 2013, down $22 billion from the previous month, according to the US Treasury Department's monthly Treasury International Capital (TIC) report issued on Friday.

While it was the second consecutive month when China's holdings of US Treasury securities declined, the nation remained the biggest overseas holder of US debt in the month.

The TIC report also showed that overall foreign holdings of US Treasury securities fell to $6.25 trillion, down from $6.28 trillion in June. In the same month, Japan, the second-largest US creditor, increased its holdings to $1.15 trillion, while the UK, the eighth-largest foreign holder, slashed its holdings by $22.8 billion. Other major countries that cut their holdings of US debt include Saudi Arabia, Russia, Canada, Singapore, Germany and Norway.

Tu Yonghong, director of the International Monetary Institute at Renmin University of China, said given the yuan's official inclusion in the SDR in October, the country may have made certain adjustments to its foreign exchange reserves, a major factor behind the July reduction in Chinese holdings of US Treasury securities.

"After the yuan's official inclusion, some central banks may increase their yuan portfolio to diversify their foreign exchange reserves, thus pointing to the increased supply of US dollars for China. In this sense, it is necessary for the country to make some preparations, or advanced structural adjustments to its foreign exchange reserves," Tu told the Global Times on Sunday.

Various financial institutions have given their estimates on the size of global reserves that will switch to Chinese assets after the yuan becomes a reserve currency.

Morgan Stanley previously expected global inflows of up to $2 trillion over 10 years, with most coming from central banks, while Bank of America Merrill Lynch estimated yuan demand to be worth $35 billion, according to a CNBC report in November 2015.

Need to unload

China Merchants Bank analyst Liu Dongliang said this may be because China has used its foreign reserves to support the yuan.

"Considering the currency's official inclusion in the SDR, the move will also serve to stabilize the yuan and help the currency smoothly endure the transition period," Liu told the Global Times.

Another reason is because China's central bank is stepping up efforts to strike a balance in the country's foreign exchange reserves, as an increasing number of Chinese enterprises are going global and investing abroad, Liu noted.

Industrial Bank chief economist Lu Zhengwei said since market expectations for a September increase in the US Federal Reserve's benchmark interest rates is quite low, the dollar is likely to face more pressure, thus justifying the central bank's decision to unload US debt.

"Quite a number of factors could explain the result … and there is no need to over-interpret the implications of a monthly change," Tu said.

She also pointed out that China's foreign exchange reserves, which have dropped from a peak of nearly $4 trillion in 2014, remain the world's largest.

"More than a quarter of China's cross-border trade is settled using the renminbi, and after the yuan is officially included in the SDR, more countries and regions will accept the yuan as the settlement currency in trade with China," Tu explained. "Thus, we need to gradually lower the huge amount of foreign reserves."


Source

*****************
Out Of Mind
www.oom2.com
China Continues to Cut US Debt for Yuan's SDR Entry 2245507099China Continues to Cut US Debt for Yuan's SDR Entry 2245507099
Purpleskyz
Purpleskyz
Admin
Admin

Posts : 5667
Join date : 2011-08-16
Location : Woodstock Nation

View user profile

Back to top Go down

China Continues to Cut US Debt for Yuan's SDR Entry Empty Re: China Continues to Cut US Debt for Yuan's SDR Entry

Post by Kevind53 Mon Sep 19, 2016 1:28 pm

China is selling US debt because they are broke and need to liquefy some of their reserves to prop up their economy. Their inclusion as a small component (8%) in the SDR basket will neither increase the usage of the Renminbi for payments, nor make it suddenly a major reserve currency.

*****************
Trust but Verify --- R Reagan Suspect

"Rejoice always, pray without ceasing, in everything give thanks; for this is the will of God in Christ Jesus for you."1 Thessalonians 5:14–18

 China Continues to Cut US Debt for Yuan's SDR Entry 2805820865  China Continues to Cut US Debt for Yuan's SDR Entry 2805820865  China Continues to Cut US Debt for Yuan's SDR Entry 2805820865  China Continues to Cut US Debt for Yuan's SDR Entry 2805820865
Kevind53
Kevind53
Super Moderator
Super Moderator

Posts : 27226
Join date : 2011-08-09
Age : 22
Location : Umm right here!

View user profile

Back to top Go down

Back to top

- Similar topics

 
Permissions in this forum:
You can reply to topics in this forum