China: Becoming harder for the world to buy U.S. treasuries

China's central banker recently said that it is becoming harder for governments around the world to buy United States treasuries, while warning that the US Dollar will lose its value.

Currently, the United States Dollar Index is trading at 78.2 points. At the present time, the People’s Republic of China owns just under $1 trillion of US treasuries but some say they have $2.3 trillion in reserves. The Deputy Governor of the People’s Bank of China, Zhu Min, said on Thursday that it’s getting a lot harder for governments around the globe to purchase US treasuries because of their current-account gap is reducing supply of dollars overseas, according to Shanghai Daily. He spoke on the issue globally and not just specifically to China. Speaking to an academic audience, Zhu said that it’s absolutely inevitable the US Dollar will lose its worth and continue to fall in value because Washington continues to issue more treasuries to finance deficits and debt. “The United States cannot force foreign governments to increase their holdings of Treasuries. Double the holdings? It is definitely impossible. The U.S. current account deficit is falling as residents' savings increase, so its trade turnover is falling, which means the U.S. is supplying fewer dollars to the rest of the world.” Zhu concluded, reports Reuters, that the world doesn’t have enough money to buy US treasuries. In a general sense, Chinese officials are quite cautious of any comments, analysis or remarks on the US Dollar and treasuries because China owns so much of it and doesn’t want it to lose any of its value. Nevertheless, according to Bloomberg News, Treasury Secretary Timothy Geithner said that the US remains a safe haven for investors and that during the financial panic last year, investors flocked to the Dollar and treasuries. “As fear has receded somewhat and confidence returned, some of that has been unwound and reversed, said Geithner. China does favor a stable Dollar and pegged the Yuan to the Dollar since July of last year to help exporters of Asian nations.