China's warning on "excessive" US assets sends dollar crashing
07 Jun 2011
Comments by a Chinese official that China should guard against risks of the US pursuing a weak dollar policy sent the greenback crashing today.
The dollar declined against all major currencies after Guan Tao, head of the international payment department at China's foreign exchange regulator, said in an article that the dollar could weaken further against other major currencies.
The dollar hit a one-month low against a basket of currencies that include the euro and a record low against the Swiss franc after the official warned or risks of China holding "excessive" US dollar assets.
"We must be alert of economic and political risks in excessive holdings of US dollar assets," Tao said in his article.
"The United States has taken an expansionary fiscal and monetary policy to stimulate economic growth, and the US may find it hard to resist the policy temptation of weakening the dollar abroad and pushing up inflation at home," he said.
The article, published on the website of China Finance 40 Forum, a Beijing-based think-tank of economists, bankers and government officials, however, was later removed from the website.
