Dollar's Value Driven Down by China Investments in Euro, Yen, WSJ Reports
China’s increased investment in yen- linked and euro-related products is driving up those currencies against the U.S. dollar and helping to keep Chinese exports competitive, the Wall Street Journal reported, citing traders.
The Chinese government’s plan to accumulate yen may serve its long-term trade objective, making its exports more competitive with Japan’s, the report said, citing Luca Silipo, Asia-Pacific chief economist for Natixis in Hong Kong.
China is trying to spread its investments from the $2.5 trillion it holds in currency reserves by moving away from holdings in U.S. Treasuries, according to the report. It’s a good time, on a yield basis, to sell U.S. fixed income and to buy Japanese and European fixed income, the report quoted Douglas Borthwick, head of trading at Faros Trading in Stamford, Connecticut, as saying.
The U.S. currency has lost 8 percent against the yen this year, the report said.
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