China’s Holdings of US Treasuries Hit Seven Month High

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China has increased its holdings of US Treasuries for the fourth consecutive month in May, bringing the total to a seven month peak.

The latest Treasury International Capital data released by the US Treasury Department indicates that China’s holdings Treasuries increased by USD$10 billion in May, bringing the total to $1.1022 trillion.

China remains the second biggest holder of US Treasuries after Japan, which increased its stack of US Treasuries by $4.4 billion in May to reach $1.113 trillion in total.

The People’s Bank of China announced earlier this month that in June China’s foreign reserves increased for the fifth consecutive month for their longest cycle of increase in three years, and keeping the balance above $3 trillion for the fifth consecutive month.

Speaking to wallstreetcn.com, Liu Jian, senior financial researcher with the Bank of Communications, said that the increase in foreign reserves in June was primarily due to rises in the valuation of non-US dollar assets resulting from a 1.4%  decline in the dollar index.

These increases were offset, however, by increases in the yields for US, Euro and Japanese long-term government bonds, resulting in declines in the prices for these securities.

 

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