The bond markets witnessed a huge increase in Chinese investors ' sales of US Treasury

bonds, which may be justified in light of the recent turmoil in the bond market, but some

analysts also attribute this to the attempts of the Chinese central bank to support the

national currency, the yuan, and work to stabilize its exchange rate against the dollar.

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Edited  by |ANNA sam

 

Economic  section -  CJ journalist

 

World - October,23,2023 

 

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Despite the attempt by the head of the US Federal Reserve (central bank) to reassure the

markets in his statements a couple of days ago that the bank will tread carefully with the

monetary tightening policy (raising the interest rate and withdrawing liquidity from the

market), stock markets saw their indices fall as the yield on Treasury bonds rose and their

prices fell. The rate of Return is inversely proportional to the value of the bond, and the

bond market has been experiencing constant turmoil in recent weeks with rising interest

rates and other factors.

Adding to these factors was the US Treasury Department's data on holdings of US sovereign

debt bonds, as figures this week showed that Chinese investors, one of the largest buyers of

US Treasury bonds, disposed of their holdings of US bonds and stocks by the largest amount

in August and at a rate unprecedented in four years.

Chinese institutional investors such as the people's Bank of China and Chinese private

investors and funds disposed of up to 15 billion dollars, mostly from US Treasury bonds,

whose total sales in that period amounted to 21.2 billion dollars, that is, Chinese investors

'share of the volume of disposal of US debt securities reached three quarters of their sales

that month, while Chinese investors' sales of US stocks held by them reached five billion

dollars last month.

The yuan has lost 5.7 percent of its value against the dollar since the beginning of this year,

due to the large difference in high and low interest rates on the dollar in China, which makes

foreign investors withdraw their money from Chinese assets and invest it in US dollar assets

to get a higher return due to the high interest rate.