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China may be mulling Treasuries slowdown, but options limited

Jan 11 , 2018

Chinese officials reviewing the country’s vast foreign exchange holdings have recommended slowing or halting purchases of U.S. Treasury bonds amid a less attractive market for them and rising U.S.-China trade tensions, Bloomberg News reported on Wednesday.

The report sent U.S. Treasury yields to 10-month highs and sent the dollar lower. Economists cautioned, however, that China would not be able to make large changes to the composition of its reserves as it needs them to manage its renminbi exchange rate.

China has the world’s biggest currency reserves, approximately $3 trillion, and is the biggest foreign holder of U.S. government debt, with $1.19 trillion in Treasuries as of October 2017, according to data from the Treasury Department.



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