The dollar index has rebounded since early November

Posted by winterscarf on November 11th, 2020

Holdings of Asian bonds, should be mainly because of Asian currencies against the U.S. dollar rose more than, what can hedge foreign exchange reserves mainly in U.S. dollar assets arising from exchange rate risk.

Holdings of Japanese government bonds in China again for 10 months, subject to the Bank of Japan relaxed monetary policy, the Japanese bond yields fell, the benchmark 10-year Treasury note fell to 6 October low of 0.82% seven years. The day before the Bank of Japan announced that it would target interest rate to 0-0.1% range, also announced the establishment of a 5 trillion yen of bonds to buy the fund.

Japanese bond yields remain low, while the yen rose sharply this year. From May onwards, the yen rose against the U.S. dollar trend was unilateral, 1 November had risen to 80.22 yen, the highest since April 1995. Despite the November rebound in the dollar, the yen fell 3.8% against the dollar, but this year the yen against the dollar since May still gained around 11%.

In this context, China has for the first seven months this year, holdings of Japanese government bonds, net purchases of Japanese government bonds by about 2.3 trillion yen. But then in August, China sold 2.02 trillion yen in Japan bonds and a record for the year for the first time since 2005, reduction of the maximum monthly reduction record. The September re-sold 769.2 billion yen of Japanese government bonds, the basic clearance to this debt held by Japan.

At the same time, the yen continued to rise in 8,9 month, the end of September or the first time in six years caused the Japanese government intervention. "It's two months to sell at rallies for debt reduction should be considered, the yen still rose in October, and the market outlook is still bullish, so re-acquired at bonds may also be optimistic about the market outlook, the yen." The traders that .

The dollar index has rebounded since early November, including non-US currencies, including the yen has begun to scarves factory fall. December 8th, the dollar rebounded against the yen rose to 84.00 in the vicinity of the European market. But traders said the dollar's rebound against the yen may not be sustainable, because the U.S. labor market is weak, the debt crisis in Europe continued, after a period of time to regain boost the yen.

Japanese Finance Ministry data show that China in October bought a net 30.6 billion yen of bonds and notes, net purchases of 231.9 billion yen in the money market instruments (maturity of less than one year bonds).

Japanese bonds in the frequent "tune positions" at the same time, while China continues to buy Korean bonds. Data show that China began in July last year to buy 300 billion won per month in Korea bonds, starting from July this year to 500 billion won per month or more purchases, November record holdings of the second half of the amount is high.


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