China defends its cutting US Treasuries holdings

China defended its move to reduce its holdings of US Treasury securities, noting that the United States is obligated take steps promoting confidence in the “Greenback”

China’s Foreign Ministry spokesman Qin Gang made the comment Thursday when responding to questions on China’s sale of US Treasury securities in December.

Qin said the issue should be viewed from two perspectives.

First: China always followed the principle of “ensuring safety, liquidity and good value” in managing its foreign exchange reserve. And when it came to how much and when China buys the bonds, the decision should be made taking into account the market and China’s need, so as to realize rational deployment of China’s foreign exchange property, and,

Second: the United States should take “real and solid” steps to beef up the international market’s confidence in the US Dollar.

The way to view the issue was similar to doing business, he said. China trimmed its holdings of US debt by US$34.2B in December 2009, leaving Japan the largest holder of US Treasury securities, the US Treasury Department reported on February 16th. As of the end of November 2009, China held US$789.6B of US Treasury bonds. —Paul A. Ebeling, Jnr. www.livetradingnews.com

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