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China’s foreign exchange reserves rose to a record $2.85 trillion at the end of 2010, an 18.7 per cent increase year-on-year, sparking concerns about the country’s already excessive liquidity, analysts said. Compared with nearly $2.65 trillion in foreign reserves by the end of September, the figure increased by $199bn in the fourth quarter, marking the fastest rate on a quarterly basis in 2010, according to a statement from the People’s Bank of China released on Tuesday January 2011, China Daily reports.

China Forex Reserves for 2011

If China forex reserves keeps at that pace, Chinese forex exchange reserve could rise by $1 trillion in 2011.

written by Constantine Njeru \\ tags: Bank Of China, China Daily, Chinese Forex, Exchange Reserve, Foreign Exchange Reserves, Forex Exchange, Forex Reserves, Fourth Quarter, Liquidity, Pace, Quarterly Basis, Rose, Trillion

The price of Gold futures continue to shoot over the roof. One driver of the price is the recent gold purchases by India Central bank from the IMF.

The central bank of India has purchased 200 metric tonns of gold from IMF.

According to this economics time article.

India is spreading its assets which are said to be currently over-weighted with foreign currency, mainly in the form of sovereign US Treasury bonds. In other words, it is a hedge against a falling dollar.

India is the world’s largest private gold consumer, but the government’s holding of gold as an asset is modest. Even so, the latest purchase puts it at Number 10 among the list of top 10 gold-holders in the world.

Of India’s current foreign exchange reserves of nearly $285 billion, foreign currency assets account for more than 90% ($268.3 billion), followed by gold ($10.3 billion), IMF’s Special Drawing Rights ($5.2 billion) and a reserve position in the IMF of $1.59 billion.

While India’s current gold holdings, accounting for just 3.7% of assets, are said to be historically low, buying 200 tons in addition to the 358 tons it already holds is expected to bump up the gold reserves to more than 6%.

As India, China and Brazil buy gold it means more Dollars sales. The dollar may continue sliding downward.

written by Constantine Njeru \\ tags: Bank Of India, Brazil, Buy Gold, Central Bank Of India, Currency Assets, Foreign Currency, Foreign Exchange Reserves, Gold Futures, Gold Holdings, Gold Reserves, Imf, India Central, India China, Private Gold, Reserve Position, Sovereign, Special Drawing Rights, Time Article, Tonns, Us Treasury Bonds