China’s holdings of US Treasuries rise to a 6-month high
China’s holdings of US Treasuries rose for a third straight month in April, reaching the highest in six months, amid signs the yuan is stabilising.
Chinese ownership of US government bonds, notes and bills increased by US$4.6 billion to US$1.09 trillion in April, remaining the second-largest foreign holder of American debt, according to a monthly Treasury Department report released on Thursday. Japan, the largest non-US holder of government debt, decreased its total to US$1.11 trillion, down US$12.4 billion from a month earlier.
Total foreign ownership of US Treasuries amounted to about US$6.07 trillion in April, down by US$28.6 billion from the previous month. The report, which also contains data on international capital flows, showed a total cross-border inflow, including short-term securities such as Treasury bills and stock swaps, of US$65.8 billion.
China is prepared to increase its holdings of Treasuries under the right circumstances, as officials judge the assets are becoming more attractive than other sovereign debt and the yuan stabilises, people familiar with the matter said last week.
China’s foreign-exchange reserves climbed for a fourth month in May, the longest streak since June 2014, as the yuan rallied and tighter capital controls curbed outflows.
Reserves climbed US$24 billion to US$3.05 trillion in May, the People’s Bank of China said this month, the biggest increase since April 2014. Belgium’s ownership of Treasuries, often seen as a home to China’s custodial accounts, fell in April to US$96.4 billion.