China looking to make more loan-for-oil deals

China’s stockpile of forex reserves, the world’s largest, is estimated to be roughly two-thirds invested in dollar-denominated assets and the government has been attempting to gradually diversify its holdings.

Chinese banks have already issued about $60 billion in loan-for-oil deals since the start of 2009. The cash for these loans was obtained through the foreign exchange market, but now the government may directly hive off part of its forex reserves for these deals, Caixin reported.

Although the change in funding methods may be largely technical given the government’s control over foreign exchange transactions, it could signal that China wants to step up the pace of its loan-for-resources agreements.

Forexyard