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China won't cut dlr reserve holdings-c.bank head

Written by: Staff
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BEIJING, Mar 5 (Reuters) China will not reduce its holdings of dollar-denominated assets in its foreign exchange reserves, central bank chief Zhou Xiaochuan said on Sunday.

However, Zhou, governor of the People's Bank of China, did not say whether the proportion of dollars in the reserves would rise or fall.

Speaking to reporters on the sidelines of the National People's Congress, or parliament, Zhou said there had been market speculation that China might reduce its dollar holdings.

''The forex reserves are still growing. Some people are concerned that the amount of dollar assets in the reserves will fall. But that's not the case,'' Zhou said.

China had 8.9 billion in reserves at the end of 2005. It does not disclose the composition of the stockpile.

Zhou said China would adjust the mix of its reserves in light of global market conditions. In doing so, China's criteria would be safety, liquidity and profitability, in that order.

He did not elaborate.

Zhou was also coy about the prospects for the yuan, saying only that the currency's trend would be determined by supply and demand.

REUTERS DH RAI0724

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