Dollar decline won't lead to forex sale

[DU_ONE]

BEIJING, Mar. 6 -- Dollar-denominated assets in China's foreign exchange reserves will not be sold just because the greenback's value is declining, the country's foreign exchange chief said yesterday.

"If we sell US dollars now when it is tumbling, it means we lose money. If we do sell them, we have to buy other currencies such as the euro. But what if the euro drops?"

http://news.xinhuanet.com/english/2005-03/06/content_2656120.htm

[Maple]

1. They don't need to sell

they could simply not buy any more.

[Dover]

2. I wonder what 'cash equivalents' he owns?

Certainly not dollars.

My hope was to make several multi-billion dollar acquisitions that would add new and significant streams of earnings to the many we already have. But I struck out,” he said “Additionally, I found very few attractive securities to buy. Berkshire therefore ended the year with $43 billion of cash equivalents, not a happy position.”

[unblock]

4. i'm not an accountant, but i think t-bills are "cash equivalents"

i think the cut-off is that a maturity of 1-year or more is no longer considered a "cash equivalent".

[oblivious]

3. China forex reserves to surpass Japan's this year

SHANGHAI, (AFP) - China's forex reserves are expected to surpass Japan's this year as strong fund inflows and a burgeoning trade surplus make it the world's largest holder of foreign currency, state press reported.

"At this speed, our foreign reserves are likely to exceed Japan's," Ba Shusong, a top official with the Financial Research Institute under the State Council's Development Research Center, was cited as saying by the China Securities Journal.

At the end of September China's foreign reserves rose 15.8 billion dollars from a year earlier to hit 769 billion dollars.

By comparison Japan's foreign exchange reserves in September were down 4.20 billion dollars from August to 843.56 billion dollars.

China's foreign reserves have risen at a remarkably fast rate, hitting a record 609.9 billion dollars in 2004, up from 403.3 billion dollars in 2003.
http://au.news.yahoo.com/051025/19/wibp.html