China's state-owned sovereign wealth fund, the China Investment Corporation may have set aside NZ$6 billion of its massive foreign reserves to invest in New Zealand assets, including government bonds.
The report by interest.co.nz caught traders by surprise. The market was short and many had to run to cover their bets.
It sent NZD/USD flying higher over 100 pips to .81, up 1.5% for the day.
The wealth fund was set up in 2007 to invest some of China's US$3 trillion in foreign exchange reserves. The obvious observation is that China is diversifying away from US dollars and into EURO's, New Zealand dollar, Australian dollar, etc...
According to Dagong International Credit Rating Company, New Zealand is ranked seventh amongst 50 countries.
NZD/USD
Source: FXCM
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