May 16, 2016

How China And Japan Stabilise Their Currencies

   May 16, 2016

How China And Japan Stabilise Their Currencies

Holdings_of_US_Treasury_securities_Japan_China_Federal_Reserve_TMMChart.png

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.

Get articles like this straight to your inbox each morning with our Breakfast Briefing. Sign up by clicking here!

Log in with your details

or    

Forgot your details?

Create Account

Send this to a friend