Monday, August 18, 2008

China sells $3b of US treasury bonds

By Xu Shenglan (chinadaily.com.cn)
Updated: 2008-08-18 17:50

As of June, China held $503.8 billion worth of US treasury bonds, $3 billion less than in May, according to a report released by the US Department of the Treasury. This is the first time since February that China has cut its holding in the US government finance department.

In the latest Treasury International Capital (TIC) report, China remains the second largest holder of US treasuries by June after Japan, whose holding increased by $5.1 billion in June to $583.8 billion. The UK, the third largest holder, bought an additional $7.9 billion of bonds to reach $280.4 billion.

Although the TIC data showed China had cut US treasury holdings in June, there is a chance it may turn to other markets for the bonds such as Europe, said professor Ding Zhijie from the University of International Business and Economics.

Moreover, the large depreciation of the US dollar in June might dash investors confidence and lead to a slash of dollar-denominated assets in the foreign reserves of many countries, he said.

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