China in October sold the second-largest net amount of Japanese debt on record, as the yen fell from a post war high against the dollar and benchmark yields retreated.

The yen traded at 77.66 per US dollar yesterday, a drop from the post-war high of 75.35 to the dollar on October 31.

Japan's benchmark yields declined to 0.94 percent on November 17, the lowest level from about a year ago.

The Japanese Ministry of Finance said in a statement yesterday that China reduced holdings of Japanese debt by 853 billion yen (US$11 billion) in October.

The sale included 396.1 billion yen of mid- to long-term Japanese bonds and notes as well as money market securities worth 461.4 billion yen, the ministry said.

China may have sold the debt as "Japanese debt isn't attractive in terms of yields," Ayako Sera, a market strategist at Sumitomo Trust & Banking Co in Tokyo, which manages assets of US$298 billion, was quoted by Bloomberg News as saying yesterday.

Japan intervened in the currency markets on October 31 to restrict the yen's appreciation, which boosted the country's foreign exchange reserves, the second-largest after China's.

China sold the biggest amount of Japanese debt to the tune of 2.02 trillion yen in August 2010.

Go to Forum >>0 Comment(s)