CHINA’S holdings of U.S. Treasuries declined by the most on record last year, as the world’s second-largest economy dipped into its foreign exchange reserves to buttress the yuan. Japan, America’s largest foreign creditor, trimmed its holdings for a second straight year.

    A monthly U.S. Treasury Department report released in Washington on Wednesday showed China held US$1.06 trillion in U.S. government bonds, notes and bills in December, up US$9.1 billion from November but down US$188 billion from a year earlier. It was the first monthly increase since May.

    China’s foreign currency reserves fell for a seventh straight month in January to US$3 trillion, to the lowest in almost six years, driven by the central bank’s intervention in foreign exchange markets. More broadly, America’s biggest creditors are re-thinking their financing of the U.S. Government amid the prospect of bigger deficits and more inflation under President Donald Trump or higher interest rates from the Federal Reserve.

    Japan’s portfolio decreased for a fifth consecutive month in December, falling by US$17.8 billion to US$1.09 trillion, according to the data. The holdings declined by US$31.6 billion last year.

    The report, which also contains data on international capital flows, showed net foreign selling of long-term securities totaling US$12.9 billion in December. It showed a total cross-border outflow, including short-term securities such as Treasury bills and stock swaps, of US$42.8 billion.(SD-Agencies)