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US dollars are important part of reserves:China cb

In an interview carried by the government’s Xinhua News Agency, an unnamed official with the People’s Bank of China said US dollars and government bonds are “an important part of China’s foreign reserve investments.”

China’s US$1.3 trillion in foreign exchange reserves are the largest in the world and are believed to be comprised largely of dollar assets, potentially giving Beijing enormous sway over the dollar’s value and currency markets worldwide.

Reports in British media this past week that quoted Chinese government researchers as saying China was prepared to dump its dollars added to jitters in stock markets already unnerved by volatility in US share markets.

Xinhua said the remarks were intended to counter unspecified reports in Western media that China “is threatening to carry out a sell-off of US dollars.” The Xinhua report was prominently posted on the central government’s main Web site, in a further sign Beijing hoped the statement would underscore its commitment to calm investors.

“China is a responsible investor in international financial markets, and our country’s foreign exchange reserves are managed with the operational goals of safety, liquidity and profit,” Xinhua quoted the central bank official as saying.