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According to data recently released by the U.S. Department of the Treasury, China has reduced its holdings in the past month. The U.S. Treasury holdings have been reduced by US$100 million, the largest reduction since 2008. However, China remains the largest creditor of the United States. As of the end of the month, China's total holdings of U.S. Treasury bonds reached $1 trillion, a new low since the beginning of the year. Among them, China has sold and purchased U.S. long-term assets, and has reduced its holdings of long-term securities by a total of 0.0 billion U.S. dollars.
Zhao Yayun, a researcher at the Health and Welfare Think Tank, said that against the backdrop of heightened expectations for U.S. dollar interest rate hikes, central banks around the world are selling U.S. Treasury bonds, and the People’s Bank of China is also following the trend, in order to prevent capital outflows, stabilize the exchange rate, and lower the RMB after it is included in the basket. Foreign exchange reserves are all factors considered.
Since U.S. Treasury bonds have relied heavily on overseas investors for the past three decades, the selling by China and other central banks will undoubtedly increase the financing difficulties of the U.S. government and may have a certain impact on the Federal Reserve's interest rate hikes. Of course, the biggest buyers of U.S. Treasury bonds are the Federal Reserve and domestic investors. In other words, the Federal Reserve will not choose not to raise interest rates because of this, but it is still possible to delay or reduce interest rates.
In the first month of this year, China reduced its holdings of U.S. Treasury bonds by a total of US$100 million. China has a completely opposite attitude towards Japanese government bonds: China has increased its holdings of Japanese government bonds by nearly one trillion yen (approximately 100 million U.S. dollars) this year, compared with only .
During this month, the Japanese yen has appreciated against the US dollar by a cumulative %, and the Japanese yen has appreciated against the RMB by a cumulative .%. There is no doubt that the People's Bank of China has done a good business. Nihon Keizai Shimbun said that as China’s holdings of U.S. Treasury bonds decrease, there is a high possibility that some funds will shift to Japanese Treasury bonds. However, the international financial situation is unstable and it is uncertain whether China’s explosive buying can continue.
Zhao Qingming, chief macro researcher of the CICC Research Institute, told reporters that from the beginning of this year to February, the US dollar has been relatively weak, while the Japanese yen has been strengthening. The international community is relatively optimistic about the Japanese yen, and the Japanese yen is a safe haven. In terms of currency, adjustments to China’s foreign exchange reserves are also inevitable.
Since the beginning of the year, the Federal Reserve has slowed down its rate hikes, global central banks have been easing, and black swan events that have erupted from time to time have led to a trend decline in global risk appetite, and safe-haven assets have performed well. Global safe-haven currencies have three major characteristics: low interest rates, large domestic foreign currency asset positions, and financial markets with good liquidity, and the Japanese yen has all three characteristics.
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