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Report on China slowing U.S. bond purchases may be "fake" - regulator

Reuters  |  BEIJING 

(Reuters) - A report that is considering slowing or halting purchases of bonds may be based on erroneous information and could be "fake", the country's foreign exchange regulator said on Thursday.

reported on Wednesday that Chinese officials reviewing the country's vast foreign exchange holdings had recommended slowing or halting purchases of bonds amid a less attractive market for them and rising U.S.-trade tensions. The report sent yields to 10-month highs and sent the dollar lower.

"The could quote the wrong source of information, or may be fake news," the (SAFE) said in a statement published on its website.

could not immediately comment on the foreign exchange regulator's statement.

The U.S. 10-year Treasury yield edged down to 2.5366 percent from Wednesday's close of 2.549 percent, while the dollar gained 0.3 percent to 111.72 yen after the regulator's comment.

has been diversifying its foreign currency reserves investments to help "safeguard the overall safety of foreign exchange assets and preserve and increase their value", the SAFE said.

The forex reserves investment in bonds is a market activity, with investment professionally managed according to market conditions and investment needs, it said.

The regulator added that forex reserves management agencies are responsible investors in international financial markets.

The exact composition of China's reserves is a state secret and the subject of intense scrutiny by global investors. According to data from the Treasury Department, the country is the biggest foreign holder of debt, with $1.19 trillion in Treasuries as of October 2017.

China's foreign exchange reserves, the world's largest, rose $20.2 billion in December to $3.14 trillion, as tight regulations and a strong yuan continued to discourage capital outflows, data from China's central showed.

(Reporting by Monitoring Desk and Kevin Yao; Additional reporting by Ryan Woo; Editing by Jacqueline Wong)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Thu, January 11 2018. 11:40 IST