China Renews Call for ‘Stable’ Dollar, Monetary Diversification July 2 (Bloomberg) -- China, the largest holder of foreign currency reserves, reiterated its call for a stable dollar and a diversification of the international monetary system.
“We hope that as the main reserve currency the exchange rate of the U.S. dollar will be stable,” Vice Foreign Minister He Yafei told reporters in Beijing. “This international financial crisis has fully exposed the weaknesses and loopholes in the international monetary system.”
China, whose leaders have expressed concern that U.S. government spending to counter a recession will weaken the dollar, cut its holdings of dollar reserves by $4.4 billion in April to $763.5 billion, the latest figures available show. President Hu Jintao will attend this month’s Group of Eight summit, where China expects the issue to be raised, He said.
“We hope that in the future the international monetary system will be diversified and I believe that this is the aspiration of the entire international community,” He said. “If this issue is raised by leaders during the meeting it is nothing strange, it is natural because we are all discussing how to respond.”
The dollar rose against the euro and erased losses versus the yen after the vice minister said he wasn’t aware that China had requested the issue to be part of the G-8 agenda. The dollar climbed to $1.4105 per euro as of 12:22 a.m. in Tokyo from $1.4142 in New York yesterday. The U.S. currency was at 96.66 yen from 96.65, after earlier falling to 96.38.
The dollar declined beyond $1.42 versus the euro yesterday after Reuters, citing G-8 sources, said China asked to debate proposals for a new global reserve currency at the summit.