The dollar stands secure as the anchor of China's mammoth foreign exchange reserves, even as Beijing seeks to diversify its investments across different currencies and assets, the forex reserve regulator said on Friday.
The statement by the State Administration of Foreign Exchange, which manages the country's $2.3 trillion of currency reserves, followed a suggestion earlier in the day by an official from the agency that diversification has been very gradual.
Wang Xiaoyi, deputy head of SAFE, said China had maintained a consistent reserve allocation in different currencies and that dollar weakness was a long-term trend, not a near-term worry.
China's desire to see a stronger dollar was reinforced by an opinion piece in the People's Daily, the main newspaper of the ruling Communist Party, which said that the slumping greenback was harming the world economy.
Global markets have periodically been shaken by the idea that China could dump dollars, as it is estimated to hold about two-thirds of its currency reserves in dollar-denominated assets.
Beijing itself has long declared that it aims to diversify its forex reserves, the world's biggest such stockpile.
"A properly diversified currency structure in FX reserves, with the U.S. dollar as the main part, can satisfy external payment and asset allocation needs fairly well," SAFE said in a publication explaining how it manages the reserves.
In practice, this has meant that China has continued to focus its investments on dollar-denominated assets, even while branching out into euros, yen, sterling and more.
"We now have similar proportions of different currencies in our forex reserves as we had before," Wang said on the sidelines of a conference in Beijing. "The weakening of U.S. dollar will be a long-term trend but we don't see big fluctuations in the near term," he added.