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China Dumping American Dollars late 2006?
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With the dollar continuing to slide, what role does CHina play? Economists have been saying for a while now that China is articificially keeping their dollar low by hording American currency. Also, to keep its own exports cheap, China has been controlling the value of the yuan. The country's central bank on Monday bumped up the yuan's official level to 7.8402, and the currency traded at a record high versus the dollar. Still, daily movements are limited at 0.3 per cent above or below the official level — a trading system set up in July 2005.
Even the bank's vice governor Wu Xiaoling reportedly noted the risks arising from the U.S. dollar's decline for East Asian holders, triggering dollar selling.
China's foreign reserves are thought to have exceeded $1-trillion after officially hitting $987.9-billion by late September.
A long-term factor behind the weakening dollar is the widening U.S. current account deficit; many market watchers say the dollar is just now catching up with the fact that the United States is deep in debt.
But then again, in the end it's all just forecasting right?....
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Nov 29, 2006, 7:24 PM
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