CHINA DIVERSIFYING FOREX RESERVES
BEIJING: China is diversifying its foreign exchange reserves in order to safeguard their value, said the country’s currency regulator yesterday, while dismissing a media report the government is halting or reducing its purchases of United States debt.
Bloomberg News reported on Wednesday that Chinese officials reviewing the country’s vast foreign exchange holdings had recommended slowing or halting purchases of US Treasury bonds amid a less attractive market for them and rising US-China trade tensions.
That spooked investors worried that sharp swings in China’s massive holdings of US Treasuries would trigger a selloff in bond and equity markets globally. The report sent US Treasury yields to 10-month highs and the dollar lower.
“The news could quote the wrong source of information, or may be fake news,” said the State Administration of Foreign Exchange (SAFE) in a statement published on its website.
The US 10-year Treasury yield edged down to 2.5366 per cent from Wednesday’s close of 2.549 per cent, while the dollar gained 0.3 per cent to 111.72 yen after the regulator’s comment.
China’s foreign exchange reserves, the world’s largest, rose US$129.4 billion (RM516 billion) last year to US$3.14 trillion, as tight regulations and a strong yuan continued to discourage capital outflows, data from China’s central bank showed.
China’s holding of US government debt — the world’s largest, climbed US$131 billion in the first 10 months of last year to US$1.19 trillion, data from the Treasury Department showed.