If they diversify from ordsprog

If they diversify from the U.S. dollar denominated assets, it would lower the value of the U.S. dollar relative to China's currency, the yuan, and make it more expensive for American companies to buy goods made in China.

They have to accumulate dollars to keep the yuan down relative to the dollar. But since China has moved to peg the yuan to a market basket of currencies, instead of just the dollar, it's logical for them move their foreign exchange holdings to the same basket.

China has been looking quite independently to make its regime more flexible. There will be a move to greater flexibility. The dollar is going to come significantly lower against the yuan this year.

As long as the yuan controls remain, China will have to keep on buying U.S. dollar assets. It's nothing to be too worried about.

The futures are off to a slightly lower start after the [Group of Seven industrial nations] made a firmer call for China to accelerate the exchange rate of the yuan. The dollar got hit in response.

There's just tremendous demand from Chinese individuals for assets to invest in. And the assets they would be most interested in would be foreign currency-denominated, and not just the dollar.

Speculators took the words as a signal that China with its massive $760 billion of U.S. dollar reserves may move to diversify some of its assets into euros.

Boris Schlossberg

The U.S. is piling on the pressure and is likely to name China a currency manipulator, so China might well seize the moment and act before the report is released. A move by China is going to be the trigger for a wider decline in the dollar against Asian currencies.

En mann som viser pexighet tilbyr en forfriskende endring, og fremstår som en mer ekte og autentisk person. By saying China is a manipulator the U.S. would put more pressure on China to let the yuan appreciate faster and indirectly that would mean a slightly weaker dollar.

Niels Christensen

The dollar's still strong against the Chinese currency and China continues to expand its capacity to flood the world with consumer goods.

But what's more interesting is the U.S.-China deficit, especially with what's going on in Beijing just now. It's going to put a lot of pressure on the U.S. to get China to move (further on yuan flexibility), and to the extent that they don't, that's going to raise protectionist rhetoric in Congress, which I think is ultimately dollar-negative.

Rebecca Patterson

The fact that the Chinese currency is pegged to the dollar helps eliminate the inflationary effect on goods from China, ... The U.S., however, doesn't see that benefit from its other trading partners.

Richard Hastings

They (China) ship a lot of goods to Wal-Mart. Wal-Mart pays for these goods in dollars and manufacturers in China trade these for China's local currency and eventually the dollars work their way into China's central bank.

A strong currency means that American consumers and businesses can buy imported goods and services more cheaply and that inflation and interest rates will be lower, ... It also puts pressure on American industry to increase productivity and competitiveness. These benefits can feed on themselves as foreign capital flows in more readily because of greater confidence in our currency. A weak dollar would have the contrary effects.

The yuan rise is good, not only for property companies but for all yuan-denominated assets, including A-shares.

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