November Foreign Holdings Of Yuan Bond Increases, Hits Second Highest

Foreign investors have continued to increase holdings of yuan bonds since Q3, with inflows of USD33 billion in November, the second highest monthly increase on record. The China-U.S. interest spread narrowed by about 60 bps at the end of November from October's high amid increasing expectations of U.S. rate cuts, alongside a 2.6% appreciation of CNY against the dollar, said Yu Lifeng, senior analyst at Golden Credit Rating. The foreign allocation of yuan bonds will likely rise further as the end of Fed rate hikes will drive more funds to emerging markets, said Yu. The recovery of the Chinese economy will also play an increasingly supportive role in to stabilise cross-border capital flows, said Wang Chunying, spokesperson at the State Administration of Foreign Exchange. (Source: Shanghai Securities News)