“Smart Trade Group” – (China Diversifying Quietly).

Added: (Fri Jun 26 2009)

Pressbox (Press Release) - ‘Smart Trade Group’: China’s concerns over the weakening US dollar prompting quiet action.

“Smart Trade Group”, the Asian-based broker, is thought to be convinced that the People’s Republic of China is quietly diversifying its foreign exchange reserves away from US dollar-denominated treasuries and agency debt.

They cite the gradual build up of Chinese holdings in major commodity-producing concerns like miners and oil producers.

This, a source close to “Smart Trade Group” suggested, could be seen as a sign that the world’s third largest economy has grown mindful of the risk to the value of its national savings. China has been left with scant choices as any decision to sell its holdings of US Treasuries would more than likely see other holders follow suit thereby causing a collapse of the dollar and a consequential erosion of its other US investments.

The “Smart Trade Group” added that not continuing to buy the Treasuries would force the Federal Reserve to ramp up its buybacks which would culminate in a similar scenario as the dollar weakened further from quantitative easing,

“Smart Trade Group” said that it didn’t expect China to invest in alternative currencies since most of them faced substantial debasement as their governments continued their efforts to combat the global slowdown.