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December 17, 2016

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Japan tops China as largest US bondholder

JAPAN overtook China as the largest holder of US treasuries in October, as China’s holdings dropped to the lowest level since June 2010, data from the US Treasury Department showed on Thursday.

China cut its treasuries holding by US$41.3 billion in October, with the total holdings down to US$1.12 trillion. It has cut the holdings for five consecutive months.

Japan also shed its treasuries holdings by a smaller amount of US$4.5 billion to US$1.13 trillion.

A strong US dollar has affected China’s capital flows and caused the recent depreciation of the yuan, according to economists.

The State Administration of Foreign Exchange, the forex regulator, said recently that the country’s cross-border capital flow has remained stable with no surges in foreign exchange purchases.

SAFE also noted there is a solid basis for cross-border capital flow to be stable, in view of China’s low external debts, an opening inter-bank bond market, and a stable yuan exchange rate index.

By the end of October, overall foreign holdings of US Treasury debt fell to US$6.04 trillion from September’s US$6.15 trillion.


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