The Euro keeps falling
The entire currency market is reeling from the depression which rocked the eurozone. It is currently a challenge of relativity – which country can withstand this crisis and emerge stronger in the economic sense, and as a result have a stronger currency.
China, in particular, has emerged the strong winner. In recent months, China not only gave a fresh display of its economic and political muscle, but also exhibited the skills and sophistication on emerging from the crisis.
For example, China’s State Administration of Foreign Exchange clarified in May 2010 that Europe will continue as the key investment markets for China’s foreign-exchange reserves of nearly $2.5 trillion. This reserve is unrivaled even by the United States, and shows the long term vision of the Chinese in getting value for their investment and equally importantly, the confidence that Europe will be able to recover from the Eurozone crisis.
Currently, 1 Chinese Yuan (or Renminbi) trades at 0.1183 Euro, or 1 Euro = 8.453 Renminbi.
Hedge funds in particular, pays attention to the announcement by the Chinese government and would reconsider before shorting the Euro further. With the clout that China possesses and the clear indication to invest in Europe during this crisis, it is unlikely that a collapse of Euro is imminent.
As the China Investment Corporation (CIC) states aptly, the turmoil in Europe had only had a limited impact on its investment decision-making process. This is further backed by the Kuwait Investment Authority (KIA) also said it remained a long-term investor in Europe. Finally, South Korea said it had no plans to cut its euro holdings.
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