China increases holdings of Japanese government bonds

16:11, August 13, 2010      

Email | Print | Subscribe | Comments | Forum 

Along with the fall of the U.S. dollar and the rise of the Japanese yen in the foreign exchange markets, China has bought more Japanese yen and euro assets. In June, China largely increased its holdings of Japanese government bonds worth about 5.3 billion U.S. dollars. Since 2010, China has cumulatively bought 20 billion U.S. dollars of Japanese yen financial assets, nearly five times the amount bought in the past five years.

China currently has 2 trillion-plus U.S. dollars in foreign exchange reserves, most of which are U.S. dollar assets. Many experts are worried about holding too much U.S. debt.

"China increasing its holdings of Japanese yen assets is like killing two birds with one stone." Chen Gong, chief economic analyst of Pong Advisory, said, "First, it can help the diversification of foreign exchange reserves. Reducing holdings on U.S. debt when U.S. government bonds are on the rise, and then buying Japanese government bonds when its economy is in deflation. The timing is perfect. Second, it can help achieve the situation of the value of the yuan falling against the major currencies except for the U.S. dollar for a short time, which will steady exports."

After the global financial crisis, the U.S. dollar and Japanese yen were seen as the haven currency and once rose and fell at the same time. However, their trends have differed since 2010.

Along with the large fall of U.S. government bond yields, the dollar-yen exchange rates dropped sharply and reached the lowest in the past 10 months. Since the U.S. government bond yields still remained at a rather low level, market traders technically analyzed that there is no sign that the dollar-yen exchange rates have hit bottom, and if it keeps falling, the Japanese yen will reach a new 15-year high.

By People's Daily Online
Additional support provided by LOTO

(Editor:黄蓓蓓)

  • Do you have anything to say?

双语词典
dictionary

  
Special Coverage
  • Premier Wen Jiabao visits Hungary, Britain, Germany
  • From drought to floods
Major headlines
Editor's Pick
  • Staff members watch a screen showing the blast-off of the Long March-2FT1 carrier rocket loaded with Tiangong-1 unmanned space lab module at Beijing Aerospace Control Center, Sept. 29, 2011. Commander-in-chief of China's manned space program Chang Wanquan announced Thursday night that the launch of Tiangong-1 space lab module was successful. (Xinhua/Wang Shen)
  • Chinese President Hu Jintao watches the launch of Tiangong-1 space lab module at Beijing Aerospace Control Center in Beijing, capital of China, Sept. 29, 2011. Other members of the Standing Committee of the Political Bureau of the Communist Party of China (CPC) Central Committee, including Wu Bangguo, Jia Qinglin, Li Changchun, Xi Jinping, Li Keqiang and Zhou Yongkang, are also present. (Xinhua/Rao Aimin)
  • The graphics shows the launch procedures of the carrier rocket of Tiangong-1 space lab module, Long March-2FT1 on Sept. 29, 2011. (Xinhua/Lu Zhe)
  • Image taken from Beijing Aerospace Control Center shows a Long March-2FT1 carrier rocket loaded with Tiangong-1 unmanned space lab module blasting off from the launch pad at the Jiuquan Satellite Launch Center in northwest China's Gansu Province, Sept. 29, 2011. (Xinhua)
  • On Sept. 28, tourists travel around the Mingshashan Scenic Area in Dunhuang, Gansu province by camel. With the National Day vacation right around the corner, more and more tourists from home and abroad are going to Dunhuang. Riding on a camel, they travel in the desert to enjoy the cities rare form of natural scenery. (Xinhua/Zhang Weixian)
  • Chinese forest armed forces work together with forest firefighters on Sept. 28. (Xinhua/Chai Liren)
Hot Forum Discussion