China Ready to Buy More Treasuries as Yuan Stabilizes
- Nation cut holdings in 2016 as it sought to defend currency
- Policy makers keen to boost confidence in yuan, DBS says
Reasons the PBOC Is Strengthening the Yuan
China is prepared to increase its holdings of U.S. Treasuries under the right circumstances, as officials judge the assets are becoming more attractive than other sovereign debt and as the yuan stabilizes, according to people familiar with the matter. Treasuries surged on the news, driving yields to the lowest since November.
The people didn’t specify the exact circumstances for continuing a run of purchases that has extended to two months through March, after reductions in all but one of the previous eight months. The nation has maintained the trend, said the people, who asked not to be identified because they aren’t authorized to comment on the matter publicly. The yuan has climbed more than 2 percent against the dollar this year, after plunging 6.5 percent in 2016 in its biggest decline in more than two decades.