China’s foreign exchange reserves has reached US$1.65 trillion, up by US$57.3bil in February, almost matching January’s surprising leap of US$61.6bil.The increase is more than three times greater than February’s combined inflows from the trade surplus and foreign direct investment (FDI).
Economists have offered various explanations for the US$61.6bil jump in reserves in January to US$1.59 trillion. These include speculative inflows, an increase in onshore dollar lending and more active trading in onshore currency forwards.
Whatever the reason, the pace of accumulation in the first two months dwarfs last year’s average monthly increase in China's reserves of US$38.5bil.
The reserves, the world’s largest, have ballooned because the People’s Bank of China (PBOC), in order to hold down the yuan, buys most of the dollars that flow into China.
(source: TheStar: China forex up US$57b in February)
It was US$101 billion in December 2007 (source)
Foreign exchange reserve is accurately deemed as official reserves or international reserves.
Bank Negara Malaysia Forex
Bank Negara Malaysia Forex or BNMF is the Malaysian central bank foreign exchange.
Recent history
In 1985, following the "Plaza meeting" of G-5 finance ministers in New York City, the US dollar fell sharply causing major losses in Bank Negara's dollar reserves. The bank responded by starting a program of aggressive speculative trading to make up these losses. Jaffar Hussein, the Bank Negara Governor at the time, referred to this strategy as "honest-to-God trading" in a December 1988 speech in New Delhi.
In the late 1980s, Bank Negara under Governor Jaffar Hussein, was a major player in the forex market. Its activities caught the attention of many; initially, Asian markets came to realize the influence Bank Negara had on the direction of forex market. Alan Greenspan acting the Federal Reserve chairman later realized Bank Negara's massive speculation activities and requested the Malaysian central bank to stop it.
BNM sold between $500 million on September 21, 1990 - $1 billion worth of pound sterlings in a short period, driving the pound down 4 cents on the dollar. In response, bankers began front running Bank Negara's orders.
Two years later, Bank Negara attempted to defend the value of the British pound against attempts by George Soros and others to devalue the pound sterling. George Soros won and Bank Negara reportedly suffered losses of more than USD $4 billion.
Bank Negara lost an additional $2.2 billion in speculative trading a year later .
By 1994, the bank became technically insolvent and was bailed out by the Malaysian Finance Ministry.
Two years later, Bank Negara attempted to defend the value of the British pound against attempts by George Soros and others to devalue the pound sterling. George Soros won and Bank Negara reportedly suffered losses of more than USD $4 billion.
Bank Negara lost an additional $2.2 billion in speculative trading a year later .
By 1994, the bank became technically insolvent and was bailed out by the Malaysian Finance Ministry.
(source: Bank Negara Malaysia Forex)
4 comments:
"Wen acknowledged at a nationally televised news conference this week that China faces pressure for inflation to accelerate still further. But he tried to reassure an anxious Chinese public, saying the government can hold price rises to its 4.8 percent target this year.
The rise in inflation was driven by a 23.3 percent jump in food costs in February over the same month last year, which has stirred fears of a political backlash in a society where families spend up to half their incomes on food.
The government has frozen gasoline and electricity prices and imposed price controls on food.
Bouts of high inflation in the 1980s and '90s sparked protests, a scenario that communist leaders are eager to avoid, especially as China comes under foreign scrutiny ahead of the Summer Games."
link:http://ap.google.com/article/ALeqM5i_GnchsrOsWq07cOXj7f17XcUnjQD8VHR2H00
inflation is growing out of control in China.
as for Malaysia, and the man behind it is promoted.
the yuan float is engineered by the govt. against the USD
But doc, forex reserved figures can be misleading, before discount the foreign debt.
On the forex speculation part, Dr M are not new on the gambling, the tin market. The game is nothing more than create legacy. And it cost Malaysia dearly.
The move of grabbing Guthrie and Sime Darby suite the nationalist move, but not unwise in business sense. Both guthrie and sime darby under perform compare to other palm oil player in the country.
Jefus,
When the economy is flooded with "hot money" inflation creeps steep. That's a price a nation had to pay for high growth.
But I think the Chinese govt are good in economic management.
Moo_t,
I agree with you. But you may understand that plenty of "hot money" from the hedge fund is flooding there.
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