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Xinhua: Quick Risk Management Required after U.S. QE4

Xinhua recently published an article about the new QE4 policy that the U.S. Federal Reserve announced on December 13. The article called for early risk management reactions to remedy the damage. The U.S. Fed’s QE3 and QE4 operations will inject a combined $85 billion in monthly currency. The article expressed the belief that the U.S. move was much faster than the international community expected. The Fed announced its QE3 plan only three months ago. Since China has the world’s largest foreign exchange reserve, mostly in U.S. Dollars, the QE4 execution will have the heaviest impact on China. It can also cause rapid appreciation of the Chinese currency. The immediate result will be a slowdown in Chinese exports. The article suggested that China should take similar actions to increase the supply of the Chinese currency so that the appreciation expectation can be stopped. The author called the U.S. “selfish” and concluded that the Fed is introducing an unnecessary “depreciation war.”
Source: Xinhua, December 14, 2012