Reflecting the growing strategic political and economic importance of Asian markets, Germany’s Bundesbank has announced that it will start managing some of its foreign currency reserves in Asian financial markets.
he bank is expected to initially trade in yen- and Australian dollar-assets, the financial sources said. It may also consider expanding trading to other regional currencies in the future, including the Chinese yuan, the South Korean won and Southeast Asian currencies.
[quote align=”center” color=”#b64736″] Whilst the institute has no other plans to alter the current composition of Germany’s foreign exchange reserves, as other Asian countries fight to gain prominence in the international sphere, the Bundesbank is fighting for a slice of the pie.[/quote]
Japanese and German sources have revealed that Bundesbank, which is the central bank of theFederal Republic of Germany as well as most influential institution in the European System of Central Banks, is now in finalising discussions with Japanese authorities on establishing a trading position in Tokyo. Parties involved include the Financial Services Agency, the Bank of Japan and the Finance Ministry.
The Bundesbank already has a representative office in Tokyo. It plans to upgrade the office to a forex management hub and station traders in the city. In addition, the bank is expected to shore up some of its foreign reserves worth about 190 billion euros (Y19 trillion) to acquire assets denominated in the Asia-Pacific region’s currencies.
The bank has also confirmed to Japanese newspaper Nikkei that it has decided to start managing some of its forex reserves though a trading hub which will be based in Tokyo.
The move could come as soon as September, however there are concerns that it could impact foreign exchange rates. Until now, few major countries have managed significant portions of their foreign reserves in Asia.
