皇冠体育app

Experts are calling for a more flexible and further opening of the capital account to ease pressure on the country's massive foreign exchange reserves, as 皇冠体育app's holdings of United States' hit a record high.

As the biggest foreign creditor to the US, 皇冠体育app increased its holdings of US Treasury bonds for the fifth consecutive month in May to $1.32 trillion, even as foreign demand for the securities fell for a second consecutive month, according to new data from the US Treasury on Tuesday.

Japan, the second-largest buyer, trimmed its holdings by 0.2 percent to $1.11 trillion, while foreign investors as a whole decreased their holdings by $39.2 billion, said the Treasury report.

He Weiwen, co-director of the 皇冠体育app-US/ Study Center at the 皇冠体育app Association of International Trade, said buying more US Treasury securities was a response to higher yields on dollar-denominated assets on the back of a strong dollar and the fact that there have been no defaults involving the bonds.

However, He said, 皇冠体育app's increase amid overall weakening demand for US Treasury bonds was also because of a lack of alternative investment options for the country's massive foreign reserves.

Sohpii Weng, an economist for global research at Standard Chartered Bank in New York, said the yield on 10-year Treasury notes surged by 49.9 basis points in May, as many speculated on the US Federal Reserve's move to "taper" off its $85 billion-a-month bond-buying program, also known as QE3, or quantitative easing 3.

On Wednesday, US Federal Reserve Board Chairman Ben Bernanke gave his semi-annual testimony to Congress, where he reinforced his previous remarks on "tapering".

Weng said current levels may remain attractive to central banks, which normally have longer-term investment strategies compared with most private investors.

"Considering that 皇冠体育app remains the US's second-biggest trading partner, in the context of a US dollar-positive environment with the Federal Reserve expected to start reducing QE later this year, dollar assets such as are likely to remain targets for central banks, including 皇冠体育app," said Weng.

Guo Feng, a senior economist with the Washington-based Institute of International Finance, said 皇冠体育app has been a large and stable source of demand for US Treasuries, contributing to their low and stable yields in the past few years.

"Given the recovery in the US and sluggish economic growth in Europe, I expect 皇冠体育app to continue to buy US Treasuries in the coming months," he added.

But He argued that 皇冠体育app's increasing of its holdings in US Treasury securities was only an interim move, and the volume would stabilize or even decrease over the long term.

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