Foreign Holdings of China’s Bonds Surge for 12th Month in August

Foreign holdings of China's onshore yuan bonds grew for the 12th consecutive month in August, totaling 4.52 trillion yuan. The increase reflects a steady foreign interest in yuan-denominated assets, supported by a stabilizing exchange rate. U.S. and European rate cuts are expected to further buoy the global financial environment.

Foreign holdings of China's onshore yuan bonds rose for the 12th straight month in August, reaching 4.52 trillion yuan ($637.91 billion), according to official data published Wednesday.

Data from China's central bank showed an increase from 4.46 trillion yuan in July. This trend indicates a stable foreign appetite for yuan-denominated assets amid steadying exchange rate expectations, as noted by China's forex regulator.

The yuan has appreciated over 2% against the dollar since August, driven by the latter's weakness ahead of anticipated U.S. rate cuts. The State Administration of Foreign Exchange (SAFE) commented that global financial conditions are likely to improve as major economies, including the U.S. and Europe, enter easing cycles.

In August, foreign institutions boosted their holdings of Chinese treasury bonds to 2.28 trillion yuan from 2.24 trillion yuan in July. Interbank deposit holdings also saw an uptick, rising to 1.12 trillion yuan from 1.09 trillion yuan in the same period.

($1 = 7.0856 Chinese yuan renminbi)

(With inputs from agencies.)