China Defends Yuan with US Treasuries It has Amassed. Still Both Fall

choi

(1) China's Yuan Just Dropped to an 8-Year Low After the Fed Decision. Reuters, Dec 15, 2016.

"China's yuan fell to its weakest in 8-1/2 years [spot yuan traded at 6.9350 per dollar] on Thursday after the US Federal Reserve [hiked 'federal funds rate' by 0.25% and] signaled a faster pace of rate hikes [three planned in 2017]

"The Chinese currency drifted lower even as state-owned banks sold dollars and the authorities stepped up their defense.

Note: There is no need to read the rest.

(2) Kevin Yao, China Expected to Lose Top US Creditor Crown to Japan as Yuan Struggles. Reuters, Dec 15, 2016.
http://www.reuters.com/article/u ... lysis-idUSKBN1441Y4

Quote:

"China's holdings of US Treasuries fell by $28.1 billion to $1.157 trillion in September from August -- the lowest in four years, according to data from the U.S. Treasury Department. * * * Japan kept its position as the second-biggest owner of US Treasuries with $1.136 trillion in September. Its holdings fell by $7.6 billion from August

"Economists say they expect China to continue to reduce its holdings of US government debt, considered as the most liquid dollar assets, to help defend the yuan, but a big sell-off [as a weapon against Trump's shaking up of One-China policy] looks unlikely