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Sovereign funds cut exposure to weak dollar
Some of the world’s largest sovereign wealth funds are seeking to scale back their exposure to the US dollar in a sign of global concern about the currency.
One big sovereign fund in the Gulf has cut its dollar-denominated holdings from more than 80 per cent a year ago to less than 60 per cent, while China’s State Administration of Foreign Exchange (SAFE) has been looking to strike deals with private equity firms in Europe as a part of a strategy to reduce its dollar holdings.
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The shift at China’s SAFE is significant because it holds the majority of the country’s $1,600bn in foreign currency reserves in dollar instruments and has lagged behind other governments, such as Singapore, in diversifying its currency exposure. SAFE has been holding talks with Europe-based private equity firms about putting billions of dollars into their latest funds, precisely because these funds are not dollar-denominated, say people familiar with the matter.
By allocating money to Europe-based private equity firms, SAFE could diversify away from the dollar, at least at the margin, without spooking the currency markets and driving the dollar down in a disorderly manner.
In addition, SAFE is encouraging the private equity firms with which it has relationships to make investments in natural resources companies in markets outside the US – in part, to hedge its exposure to the dollar.
Booo! By Halloween, we will see lots of spooks scaring investors. The Chinese, the Arabs, all the pirates, everyone is trying to palm off everything to Uncle Sam so they can tip toe away and leave us holding the bag which will then be worth $0 since no one wants to buy it. World trade will collapse, of course. They worry about this. They feel, there is still some unsold assets and physical stuff in the US so they will let us limp along but they are now worried about the government free money hand outs which are very, very inflationary.
Note that these people are seeking 'SAFE' havens. This is IMPOSSIBLE. The hag we call 'inflation' can go through brick walls. Being the sister of Death, she can enter deep bank vaults. She can fly to the furthest corners of the earth which is easy since she is from the Outer Darkness which is greater than the entire universe! She cannot be stopped except by the infinity money makers giving up and surrendering to her. This means no more debts until the capital base is built up again."(snip)
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