Financial Times: China’s dollar anxiety

Short View: China’s dollar anxiety
By Spencer Jakab

Published: August 20 2009 18:37 | Last updated: August 20 2009 18:37


Media accounts of fund managers’ prognostications are often mentioned along with their assets under management, as if that were a gauge of how seriously they should be taken.

A more convincing metric is long-run performance, though that is hardly foolproof.

This week, when the largest bond investor, Pimco, and the most productive, Warren Buffett, warned of the dollar’s fragility, its value quivered and commodities rallied.

But the most influential investor speaks mostly through actions, not words.

True, Wen Jiabao, Chinese premier, has said of China’s dollar exposure that he is “definitely a little worried”.

More alarming are his actions as chairman of People’s Republic of China Capital Management Inc, with $2,100bn in assets, including $776bn in US Treasuries.

China reportedly made the largest cut to its Treasury holdings in nine years in June, providing more circumstantial evidence that it is heading for the dollar exits slowly enough to avoid starting a stampede in which it, too, would be trampled. .............(more)

The complete piece is at: http://www.ft.com/cms/s/0/699fd8d0-8dad-11de-93df-00144feabdc0.html