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'China Dollar' is shaping US financial market

By Tu Lei (chinadaily.com.cn)
Updated: 2007-07-02 16:57

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A rounded dollar flowing route is forming, when the "energy dollars" brought by oil price hikes is flowing into the East Asia, Wang said. He added that the forex reserves including "China Dollar" are flowing into the US, helped by the Chinese government's decisions of setting up the State Forex Investment Company and allowing private capital to invest overseas.

According to Wang, under such circumstances, the US may see the comeback of surplus liquidity, which may heat up the US economy and its financial market.

In addition, the US may face the pressure of excessive liquidity, and the Federal Reserve may be urged to increase interest rates to keep impacting the global financial market and monetary liquidity, he added.