Economy

China's forex reserve assets 'generally secured'

(Xinhua)
Updated: 2010-07-06 15:46

BEIJING - The State Administration of Foreign Exchange (SAFE) said Tuesday China kept its foreign exchange reserve assets "generally safe" during the global financial crisis.

In a transcript interview posted on its website, SAFE, the foreign exchange regulator, said China preserved the capital value of its foreign exchange reserve investments and had "relatively good" revenue in 2008 and 2009, when the global financial crisis hit.

Related readings:  Exchange rate reform to make exports more competitive  Stable exchange rate matters  Exchange rate hits a 5-year record  Stable exchange rate matters

None of China's foreign exchange reserves were invested in high risk assets like subprime mortgage-backed bonds, which helped guarantee the reserves' safety, SAFE said.

"China's foreign exchange reserves withstood the severe test of the global financial crisis," it said.

In response to media reports about its holdings of Fannie Mae and Freddie Mac bonds, SAFE said the two US mortgage agencies' plans to delist from the New York Stock Exchange has not caused the value of the bonds to fall.

"China does not hold any Fannie Mae and Freddie Mac stock on its foreign exchange balance sheet," SAFE said, adding that the interest payments of the bonds have been normal and that the price of the bonds has remained stable.

The US Federal Housing Finance Agency, which took control over Fannie and Freddie in September 2008, last month directed the two government-sponsored mortgage purchasers to delist their shares from the New York Stock Exchange.

"We will closely monitor developments concerning Fannie and Freddie and secure the safety of China's foreign exchange reserve assets," SAFE said.