Diversification items.....

http://dailytimes.com.ng/article/cbn-acquires-more-yuan

CBN acquires more yuan

The development aims to boost business relations between both countries

ARTICLE | MARCH 3, 2012 - 11:05AM | BY IBRAHIM BELLO

Lamido Sanusi, the Governor of the Central Bank of Nigeria (CBN), on Friday disclosed that the apex bank has increased its yuan holdings to 10 per cent of its $35 billion in reserves.

Sanusi said the bank has already added the equivalent of $500 million in Chinese yuan to its reserves, adding that the CBN plans to buy more in order to enhance business transactions between China and the African continent.

In the last six months, Nigeria has converted 1.4 per cent of its reserves to Chinese currency, largely by selling euros and buying yuan on offshore markets in Hong Kong, an amount Sanusi plans to double by buying more yuan directly from the People's Bank of China while he disposes most of the bank's euro holdings.
According to Sanusi, the relationship between Nigeria and China is aimed at exploiting the country's vast oil reserves, especially as Beijing recently invested in Nigeria-based rice processing plants and airport development projects.

"As those kind of relationships improve, holding yuan would be very important," he said.

Sanusi, however, added that the U.S. dollars would continue to make up the bulk of the bank's reserves.

Razia Khan, head of Africa research for Standard Chartered Bank in London, said other African countries might not follow Nigeria's lead until China's currency become easily convertible rather than making it readily available on the open market.

"It is likely that we will see interest from the oil producers with larger external reserves first," Khan said.

and....

http://247nigerianewsupdate.com/nigeria-tilts-its-reserves-to-yuan/

CAPE TOWN, South Africa—Nigeria’s central bank has added the equivalent of $500 million in Chinese yuan to its reserves and plans to buy seven times that amount, in a shift that underscores booming commerce between China and the African continent.

The bank will gradually increase its yuan holdings to 10% of its $35 billion in reserves, Central Bank of Nigeria Gov. Sanusi Lamido Sanusi said in an interview.

Over the past six months Nigeria has converted 1.4% of its reserves to Chinese currency, largely by selling euros and buying yuan on offshore markets in Hong Kong, Mr. Sanusi said. He said he plans to increase that amount by selling much of the bank’s euro holdings and buying more yuan directly from the People’s Bank of China.

Nigeria is courting China as a customer for its vast oil reserves, and Beijing recently invested in Nigeria-based rice processing plants and airport development projects, Mr. Sanusi said.

“As those kind of relationships improve, holding yuan would be very important,” Mr. Sanusi said. He added that U.S. dollars would continue to make up the bulk of the bank’s reserves.

Other African countries aren’t likely to follow Nigeria’s lead until China’s currency—still not freely convertible—is more readily available on the open market, economists say.

“It is likely that we will see interest from the oil producers with larger external reserves first,” said Razia Khan, head of Africa research for Standard Chartered Bank in London. “I am guessing it is a trend that will become far more important than it is currently, especially if China takes steps towards currency convertibility as has been hinted by 2015.”

Ms. Khan said South Africa might also consider converting a portion of its reserves to yuan because China is it’s largest single-nation trade partner.

Daniel Mminele, a deputy governor of South Africa’s reserve bank, said the bank’s reserves are dominated by dollars, euros and British pounds, and that the strategy is regularly adjusted according to criteria including South Africa’s trading patterns.

“Any such review would include the role to be played by the Chinese yuan, given the growing trade links between South Africa and China,” Mr. Mminele said.

Mr. Sanusi, Nigeria’s central bank governor, said trade in yuan through the Hong Kong market was already liquid enough to protect the bank’s investment. As Nigeria’s government embarks on an ambitious plan to slash fuel subsidies and revamp Nigeria’s dilapidated power grid and roadways, Mr. Sanusi said he didn’t want to wait to diversify the bank’s holdings.

“At the moment you’ve got huge global imbalances, huge surpluses in Asia. It is reasonable that countries should look into the possibility of tapping into those markets,” Mr. Sanusi said. “We cannot afford to delay the infrastructure investments that we’re doing.”

and.....

http://online.wsj.com/article/SB10001424052970203753704577254794068655760.html

An analysis of U.S. Treasury data suggests China, with $3.2 trillion in foreign-exchange reserves, has begun to rapidly diversify its currencies portfolio.

"It clearly indicates China's intention not to put all its eggs in one basket," said Lu Feng, director of Peking University's China Macroeconomic Research Center.

China still remains a strong buyer of U.S. debt. China's holdings of U.S. securities rose 7% to $1.73 trillion as of June 30, an increase of $115 billion from 12 months earlier, Treasury data show.

But the percentage of dollar holdings in China's foreign-exchange reserves fell to a decade low of 54% in the year that ended June 30, from 65% in 2010. The Treasury data provided the most comprehensive read on China's holdings of U.S. securities available.

A comparison with China's own foreign-exchange reserve data suggests a marked reduction in the share of reserves parked in dollars. But difficulties in measuring China's holdings, exacerbated by what some analysts call an attempt by Beijing to hide the allocation of its reserves, mean that it is possible the data overstate the trend.

The purchase of U.S. securities amounted to just 15% of the increase in China's foreign-exchange reserves in the 12 months ended June 30, down from 45% in 2010 and an average of 63% over the past five years, according to calculations based on information published by the U.S. Treasury and the Chinese government.