PBOC official calls for entity to purchase oil using forex reserves

Sheng Songcheng, a branch head of the People’s Bank of China (PBoC), has suggested establishing an entity to use China’s US$2.27 trillion in foreign exchange reserves to buy oil and other strategic natural resources, the Wall Street Journal reported. Following concerns about the erosion of the value of China’s US dollar-denominated foreign reserves, such a vehicle would allow at least a portion of reserves to achieve more independence from US deficit spending and monetary policy. Sheng also denied that an increase in China’s forex reserves would result in a rising renminbi, despite appreciation pressures.