Salient to Investors:
Ding Zhijie at the University of International Business and Economics said:
- China has noticeably reduced purchases of dollars from local banks to allow commercial banks to trade among themselves, which may cap China’s foreign-exchange reserves and consequently its demand for US government debt.
- China’s official foreign-exchange reserves will be stable or even fall slightly in the coming years
- Other countries’ buying of Treasuries has more than made up for the drop from China.
- China has accumulated a third of the world’s total foreign-exchange reserves.
- The PBOC is trying to keep the yuan rate basically stable through the daily price-fixing.