November 18, 2019

Report on China slowing US bond purchases may be

Report on China slowing US bond purchases may be ‘fake,’
regulator says.

 

This week we learned the importance of globalization in
international business and government. A report that China may be considering diminishing
or wavering purchases of U.S. Treasury bonds may be based on incorrect
information and may be untrue, the country’s foreign exchange manager said this
previous Thursday. Bloomberg News reported on Wednesday that Chinese officials consider
the country’s vast foreign exchange holdings had advocated slowing or halting
purchases of U.S. Treasury bonds in the middle of a less attractive market for
them and rising U.S.-China trade tensions. The report sent U.S. Treasury yields
to 10-month highs and sent the dollar lower than expected.

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“The news could quote the wrong source of information,
or may be fake news,” the State Administration of Foreign Exchange (SAFE)
said in a statement published on its website. Watching the events unfold, U.S.
10-year Treasury yield edged down to 2.53 percent from Wednesday’s close of
2.54 percent, while the dollar gained three tenths of a percent to 111.72 yen
after the regulator’s statement.

China has begun to diversify its foreign current reserves
investments to yield “safeguard the overall safety of foreign exchange
assets and preserve and increase their value”, the SAFE said. The forex
reserves securities in bonds is a market activity, with investors
professionally overlooking according to market conditions and investment needs.
Currently China has the largest foreign exchange reserves which rose
exponentially, as tighter regulations take place discouraging monetary outpour.

 

C. (2018, January 11). Report on China slowing US bond
purchases may be ‘fake,’ regulator says.    Retrieved January 11, 2018, from
https://www.cnbc.com/2018/01/10/reports-on-china-slowing-us-debt-buying-could-be-based-on-wrong-information-source-says.html

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