Yi Gang, head of the State Administration of Foreign Exchange (SAFE), speaks during a news conference in Beijing on Tuesday. [Xinhua]
BEIJING - China's $2.4 trillion stockpile of foreign exchange reserves is appropriately diversified in dollars, euro and yen and is not used for short-term speculation in the currency markets, a senior official said on Tuesday.
"Currently, China has built a moderately diversified currency structure including the US dollar, euro, Japanese yen, etc," Yi Gang, head of the State Administration of Foreign Exchange (SAFE), said at a news conference on the sidelines of the annual session of China's top legislature.
China's reserves are the world's largest and, with such large sums at stake, even marginal portfolio shifts have the potential to move markets.
"The foreign exchange reserves are mainly invested in bonds issued by governments and government agencies of the developed and developing countries with high credit ratings, assets issued by companies and international organisations, funds and so on," Yi said.
He said China succeeded in both 2008 and 2009 "in preserving the overall security of its foreign exchange assets, with operating incomes close to those of the pre-crisis years".
As well as managing China's official reserves, SAFE is China's foreign exchange regulator.
Turning to this year, Yi said the gradual recovery of the global economy pointed to renewed momentum in Chinese exports.
"With foreign direct investment expected to increase steadily, China will be facing greater pressures from the rising amount of foreign exchange cross-border fund inflows," he said.
"And there will be a tendency for a larger portion of the assets of enterprises and institutions to be converted to domestic currency, with a greater portion of liabilities of enterprises and institutions converted into foreign currencies," he added.
