The FT reported last week that China was reviewing its holdings of eurozone debt in the wake of the crisis that has swept through the region’s bond markets.
China subsequently denied that it was set to change its diversification policy.
In a follow up piece, Reuters spoke with officials in Brazil, India, Japan and South Korea, who told the news agency that their central banks will also continue to invest in the euro.
Via Reuters:
Some of the world’s richest central banks will not stop investing in the euro, supporting its reserve status, despite the sovereign debt crisis hammering the euro zone’s currency, government sources said.
Official sources in Brazil, India, Russia, Japan and South Korea told Reuters in separate interviews that their reserve currency portfolios were too big to change without affecting markets, and there were no alternatives in the near term to the liquidity of the euro and the US dollar.
The four countries control nearly a quarter of the world’s $8.09 trillion in foreign exchange reserves.
…
“Even if the dollar or the euro is in trouble, is there anywhere else to invest? Not really. There needs to be a certain degree of liquidity,” said a senior Japanese government official, who asked not to be identified because of the political sensitivity of the issue.“Currencies of countries with capital controls won’t work too. That leaves us with very few options,” the official said.
Iran, however, may be selling the euro.
Also via Reuters
Iran’s central bank will sell €45bn from its reserves to buy dollars and gold ingots, a report on the website of state-owned Press TV said on Wednesday.
The was no announcement of the sale on the bank’s website and officials at the bank declined comment.
