China Denies It May Slow Purchases of US Government Bonds

China is denying a published report that it may slow or even stop purchasing U.S. Treasury bonds.

Sources told U.S.-based financial news outlet Bloomberg Wednesday that senior government officials recommended the action as the market for U.S. government bonds is becoming less attractive, along with rising trade tensions with the United States. The Bloomberg report triggered a decline on bond markets and a selloff of the U.S. dollar during the day.

In a statement posted on its website Thursday, China’s State Administration of Foreign Exchange said the Bloomberg story was either misinformation or “fake news.” The agency says the country’s huge reserves of foreign currencies are professionally managed on the basis of market conditions and investment needs.

China has the world’s largest foreign-exchange reserves at $3.1 trillion.

The U.S. Treasury Department says China holds about $1.2 trillion in Treasuries, making it the largest foreign holder of U.S. government debt.

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