beyondbrics

The euro swung about on apparently conflicting reports about China’s plans for its holdings of the crisis-battered currency. The euro first fell in early Asian trading, nearing a four-year low against the US dollar, on an FT report that Beijing was eyeing cuts in its holdings of eurozone paper. Then, the EU’s common currency bounced back on a Reuters report of a Chinese official saying China remained committed to its long-standing goal of diversifying its foreign exchange holdings.

For good measure, Xinhua, the state news agency, reported the head of China’s sovereign wealth fund saying that the Greek crisis would not have a big impact on China’s foreign investments. Against that, the FT report included a comment from a senior foreign ministry official who told Bloomberg virtually the opposite.

So what is going on? Investors don’t know and are scrambling about. And so are the journalists.

The euro touched a low of $1.2154, just above last week’s four-year low of $1.2143 before rising sharply to $1.2288, up 1.1 per cent on the day, at 0845 BST. To put things in context, this places the euro in the middle of its all-time trading range, between its record low of $0.8825 and record high of $1.6040.

Asian equity markets were generally firm today, with the Nikkei closing up 1.23 per cent and the Shanghai Composite up 1.15 per cent. The Hang Seng was trading 1.63 per cent higher and the Mumbai Sensex up 0.88 per cent.