China boosts purchases of US Treasuries in July

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China ramped up purchases of US Treasuries for a sixth straight month in July, data from the Treasury Department showed on Monday.

The country remained as the world's largest holder of US Treasuries as the Chinese government saw less need to sell its US holdings because of a steadily improving Chinese currency.

For most of 2016, China sold its holdings of US government debt to support its depreciating currency as the government grappled with capital outflows.

That trend has reversed this year as China’s holdings rose to 1.17 trillion dollars, making it the largest non-US holder of Treasuries. Since January, China has added 114.9 billion dollars in US debt.

In June, China reclaimed its position of the world's largest holder of US Treasuries.

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Japan, which overtook China as the largest holder of US Treasuries last October, raised its holding by 22.3 billion dollars to 1.11 trillion dollars in July.

“China has basically gone the other way,” said Subadra Rajappa, head of US interest rates strategy at Societe Generale in New York. “They must be happy where their currency is right now because they have been growing their reserves once again.”

The Chinese renminbi has appreciated more than 5 percent against the US dollar so far this year. With the appreciation of the Chinese currency and the sound economic performance at home, China's forex reserves rose for the seventh month in a row in August.

With sound economic fundamentals, wider openness and more stabilized market expectations, cross-border capital flows will continue to keep balanced and stable, said the State Administration of Foreign Exchange, China's foreign exchange regulator.

Global central banks overall increased their holdings of Treasuries to 6.25 trillion dollars in July, from 6.171 trillion dollars the previous month.

Data also showed that foreigners sold Treasuries amounting to 490 million US dollars in July, after purchasing 19.7 billion US dollars in June, according to the figures from last four months.

Yields on US benchmark 10-year Treasury notes at the beginning of July were 2.346 percent, hitting a high of 2.398 percent and ending the month at 2.292 percent. On Monday, US 10-year yields were at 2.34 percent.

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Source(s): Reuters ,Xinhua News Agency