South Korea’s central bank is considering buying several hundred million dollars worth of Chinese equities and a greater amount of the nation’s bonds to diversify its foreign-exchange reserves.
“The Chinese yuan has the potential to become a key reserve currency in the long term and thus we are building a channel to invest there,” Choo Heung Sik, 53, director general at the Bank of Korea’s Reserve Management Group, said in an interview in his office yesterday in Seoul. He said the bank may invest in Chinese shares in the second half of this year, after purchases of debt in the first six months.
The diversification plans for South Korea’s $306 billion of foreign-exchange holdings underscore increasing international interest in yuan assets as China’s global economic stature rises and its government promotes international use of its currency. A slide in yields on U.S. Treasuries has diminished interest income for the world’s largest reserve currency, the dollar.
Read full article at Bloomberg.
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