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How China And Japan Stabilise Their Currencies

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Trader’s remarks: China and Japan have been steadily accumulating US treasury securities for decades. These Asian countries have a strategy to maintain export-led growth. Since this strategy is dependent on exports (mostly to the US), they buy US Treasury to prevent the local currency from appreciating significantly against the dollar. However in 2016, China has been selling Treasury debt and using the proceeds to stabilise the Chinese yuan after it suffered a crisis in confidence due to a sharp slowdown in economic growth.

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