China increases holdings of US treasuries for 4th month in a row as yuan stabilises

PUBLISHED : Wednesday, 19 July, 2017, 7:50am
UPDATED : Wednesday, 19 July, 2017, 7:50am

China raised its holdings of US Treasuries for a fourth straight month, a sign the nation is rebuilding its foreign-currency reserves as the yuan stabilises.

China, the second-largest holder of Treasuries, held US$1.10 trillion in May, up US$10 billion from a month earlier, according to Treasury Department data released on Tuesday in Washington. Japan, the biggest holder, owned US$1.11 trillion, up slightly from its total in April.

The two countries account for more than one-third of all foreign ownership of Treasuries, which gained by US$49.9 billion in May to US$6.12 trillion, the figures showed. Of that total, US$3.94 trillion were government holdings.

China’s foreign-exchange reserves rose for fifth straight month in June as the currency stabilised and investors were less eager to move money abroad. Stricter capital controls and a stabilising yuan this year have eased outflow pressures as policy makers encourage foreign investors to channel more money into the country.

The Treasury’s report, which also contains data on international capital flows, showed a net inflow into US long-term securities of US$91.9 billion after a US$9.7 billion inflow in April. It showed a total cross-border inflow, including short-term securities such as Treasury bills and stock swaps, of US$57.3 billion following a US$74.4 billion inflow the prior month.