RTTNews - China's foreign exchange reserve policy is always quite stable and there are not any sudden changes, the People's Bank of China Governor Zhou Xiaochuan said Sunday.
Speaking on the sidelines of meetings at the Bank for International Settlements in Basel, Switzerland, Zhou said, Our foreign exchange reserve policy is always quite stable and consistent, that is to say for the purpose of liquidity and safety and the returns.
On June 26, China renewed its call for a new global reserve currency to replace the U.S. Dollar, which triggered a fall in the greenback in the currency markets due to speculation that China will diversify its currency holdings.
Supporting China's call, Brazil also want a currency agreement that will allow traders to settle their deals in their own local currency, replacing the dollar. Zhou met Brazil's Central Bank President Henrique Meirelles on Saturday to discuss the matter.
Chinese authorities including Premier Wen Jiabao has been voicing concerns about the value of the dollar as the U.S. government battles its way out of the recession. Excessive emphasis on the dollar as a reserve currency is something that does not go down well with China.
At the end of March, China's foreign-exchange reserves, the world's largest, stood at $1.95 trillion.
According to the U.S. Treasury data, Chinese investors, the biggest foreign owners of U.S. Treasuries, cut their holdings by $4.4 billion in April to $763.5 billion.
With regard to the economy, Zhou said the second quarter is expected to be better than the first, when the gross domestic product grew 6.1%.
I see that prevailing predictions are that the second quarter is a little bit better than the first quarter, Zhou said.
The World Bank recently raised its forecast for China and said there is no need for additional stimulus for the economy. The bank now expects the economy to grow 7.2% in 2009, up from the 6.5% growth estimated in March.
Last week, the Paris-based Organization for Economic Co-operation and Development predicted a strong rebound in the Chinese economy from the slowdown in the autumn of 2008 due to the monetary and fiscal stimuli. Real GDP is expected to rise 7.7% this year, followed by a 9.3% expansion in 2010.
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