November 16, 2017 / 12:46 AM / 3 years ago

China's U.S. Treasury holdings decline in September: data

NEW YORK (Reuters) - China’s holdings of U.S. Treasuries declined for the first time in eight months in September, after hitting their highest since July 2016 in August, data from the U.S. Treasury Department showed on Wednesday.

China’s Treasury holdings fell to $1.18 trillion, from $1.2 trillion in August. The world’s second largest economy, however, remains the largest non-U.S. holder of U.S. Treasuries.

Since January, China has added nearly $130 billion in U.S. debt.

Analysts had said China had been buying Treasuries for the most part of 2017 to counter the strengthening of the renminbi.

The Chinese currency has gained about 4.7 percent against the dollar so far this year, after falling 6.5 percent in 2016.

China had to sell some of its U.S. Treasury holdings for most of last year as the yuan weakened amid a surge in capital outflow.

Japan, meanwhile, was the second-largest non-U.S. holder of Treasuries, with $1.09 trillion, slipping $5.07 billion for the month. Global central banks overall increased their holdings of Treasuries to $6.32 trillion in September, from $6.27 trillion the previous month. Data also showed foreigners bought Treasuries for a second straight month. Foreign investors purchased $12.74 trillion in U.S. Treasuries, after buying $17.48 trillion in August. The yield on U.S. benchmark 10-year Treasury notes at the beginning of September was 2.157 percent, ending the month at 2.326 percent. On Wednesday, U.S. 10-year yields were at 2.325 percent. Foreigners also bought U.S. stocks in September to the tune of $26.26 billion, the highest monthly purchase since July 2016.The data also showed foreign investors purchased $80.9 billion in long-term U.S assets after buying $73.2 billion the previous month.

Including shorter-dated securities, however, overseas investors sold $51.3 billion in September, after buying $130.2 billion in February.

Reporting by Gertrude Chavez-Dreyfuss; Editing by Chizu Nomiyama

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