Chinas Currency Manipulation
For foreign exchange investors one of the key issues facing the currency markets will be the future behaviour of China, India and the rest of the Far East. They hold huge foreign currency and gold reserves, particularly, if measured against their GDP. They maybe holding them in order to provide China stimulus. Similarly, it may be part of a movement toward a one world currency.
Whichever the reason, they are hoarding reserves and the implications are significant. The hoarding creates a global structural imbalance between countries that are savers and investors. As a consequence,many see the need for the Asian countries to start spending and stop saving, in order to bring the imbalance back.
Foreign Currency Reserves and GDP. One World Currency?
This article explores the issues of how and why they are saving. Firstly, here is a selected table of foreign exchange and gold reserves as a share of GDP (trillions) courtesy of the CIA:
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