China is ready to increase its holdings of u.s. government securities if the conditions are right. The chinese representatives deem that the assets are becoming more attractive than other sovereign debt, and then the yuan stabilized.
It is reported by Bloomberg News, referring to the people familiar with the matter.
The american tioårsräntan fell to their lowest level since mid-november after the news.
The sources are not specific on the exact conditions for the continuation of the purchases that have been going on earlier in the year, after China in the past, reduced its holdings for several months last year.
”When the yuan is strengthening , China has the opportunity to build up its foreign exchange reserves when the market has been concerned about the decline of the reserve,” said Tommy Ong, head of rates and markets at DBS Hong Kong, to Bloomberg News.
According to him, would purchases of u.s. securities increase the confidence then the chinese representatives want to show that all form of concerns over the yuan’s weakness or devaluations were excessive.
”They do not want to exchange rate strengthened or weakened greatly before the communist party congress later this year,” said Tommy Ong.
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