China, the world’s largest holder of foreign exchange reserves, yesterday denied a media report saying it was reviewing its holdings of eurozone debt, calling the report “baseless.”
“The report is baseless,” China’s State Administration of Foreign Exchange (SAFE) said on its Web site.
“China’s foreign exchange reserves [agency], as a responsible long-term investor, has always held a diversified investment strategy,” SAFE said. “The European market was and is one of the most important investment markets for [China’s] foreign exchange reserves and will remain so in the future.”
The Financial Times earlier reported that China was reviewing its eurozone debt holdings in view of the accelerating crisis in Europe, saying that SAFE officials had met with foreign bankers on the issue in Beijing in recent days.
The report, which did not cite any sources, said SAFE has expressed concern about its exposure to problems in Greece, Ireland, Italy, Portugal and Spain. SAFE holds an estimated US$630 billion of eurozone bonds in its reserves, the report said.
About 70 percent of China’s reserves are held in US dollar securities, but the composition and management of the funds controlled by SAFE are regarded as state secrets.
Analysts said the report was among reasons cited for the US stock market reversal Wednesday from strong gains chalked up earlier. The Dow Jones Industrial Average ended the day down 69.30 points, or 0.69 percent, at 9,974.45 — the first time the blue-chip index closed below the sensitive 10,000 level since Feb. 8.
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