China’s forex reserves surged to US $ 1 trillion !

China ’s foreign currency reserves surged to US $ 1 trillion , the most ever held by a single country. It is growing at US $ 30m an hour. Wow ! am I reading this news correctly or the media printed this figure by mistake ? My eyesight is still alright hopefully. Yes , it is US $ 30 millions per hour … can you imagine that ?

The growth has been driven by a record trade surplus that critics in the United States blame on an artificially undervalued yuan. The government’s policy of not allowing the yuan to strengthen to reflect demand for the currency keeps the nation’s export prices low , further fuelling the trade surplus. Holding a large foreign currency reserve is of strategic importance for China to cope with international challenges. China maintains the forex reserve mainly for the purpose of guarding against international financial risks , ensuring the balance of international payments and safeguard security of the national economy.

Some consider that a fast rise could also over-stimulate the economy. Will this trade surplus and excessive reserves potentially bring more problems than benefits ? Let’s watch and see. But from a layman’s perspective any growth that is too fast is no good. I am trading and I wish to have accumulation of wealth over reasonable time , there is no such thing like becoming rich overnight. I have that dream before but have aborted that dream ..

What is important to us as traders is to follow closely to China’s exchange rate policy , tough it may not directly impact on what we are trading. Some think that reforming China’s exchange rate policy is an important objective and that China should move to a fully convertible currency as rapidly as possible. Currently I am watching and trading the forex spot and it will be interesting if yuan or RMBÂ becomes one of the major currency pair that can be traded online …