December 31, 2009 - The U.S. dollar will continue to be a key reserve currency in the near term and the main asset in China's foreign-exchange reserves, but diversifying the country's reserves "appropriately" will help spread out risk, China's forex regulator said Thursday, reiterating Beijing's currency stance as the year closes.
Source: online.wsj.com
November 7, 2009 -``We will favor stronger currencies over weaker ones, and will readjust accordingly,'' Cheng Siwei, vice chairman of China's National People's Congress, told a conference in Beijing. The dollar is ``losing its status as the world currency,'' Xu Jian, a central bank vice director, said at the same meeting.
Source: bloomberg.com
The Chinese certainly do not want the dollar to collapse while their reposition their reserves. This "we support the dollar," but "do not really favor it" keeps the currency markets off-balance to their true intentions. Sell dollars (diversify) and buy gold. The Chinese are very shrewd market participants.
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