(June 10, 2010) — The euro rose after the head of China’s $114 billion state pension fund mitigated concerns that the country might cut its reserves in the single currency, stating that the euro would weather Europe’s debt crisis.
“I think it is quite normal for the euro to be experiencing swings because of the European debt crisis,” Dai Xianglong, chairman of the National Social Security Fund, said at a financial forum in the port city of Tianjin, Reuters reported. “I do believe the euro will gradually stabilize and survive the crisis.”
The euro climbed about 0.7% to $1.2070 against the dollar and was up about 0.3% to £0.8271 versus the pound. Against the yen, the euro climbed approximately 0.7% to Y110.12, with markets partly boosted by better-than-expected Chinese export data, the Financial Times reported.
The National Social Security Fund’s Chairman Dai Xianglong issued comments that the euro would gradually stabilize yet he issued caution on the dollar, saying that he expected future turbulence in the dollar as a result of widening deficits in the US. “The US fiscal deficit is still big, so there is a risk that the value of China’s forex assets will contract,” Dai said.
Following the euro’s rebound, strong Chinese exports, and upbeat Aussie jobs data, the Australian dollar rallied as much as 1.5%.
“The data from Australia and China, together with remarks from (Fed Chairman) Bernanke yesterday on the U.S. economy, suggest that the European debt problems have so far not been damaging economies elsewhere,” said Minoru Shioiri, chief manager of forex trading at Mitsubishi UFJ Morgan Stanley Securities in Tokyo, to Reuters.
China’s pension fund expects its assets under management to reach 2 trillion yuan ($293 billion) by 2015 from 776.5 billion yuan at the end of last year.
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