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China pares back holdings of U.S. Treasuries for 7th month

NEW YORK, Aug 15 (Reuters) - (This August 15 story corrects to remove incorrect reference in paragraph 11 to 10-year Treasury yield falling in June)

China slashed holdings of U.S. Treasuries for a seventh consecutive month in June, Treasury department data released on Monday showed, with investors closely tracking this measure in the wake of tensions between the world's two largest economies involving Taiwan.

China's stash of U.S. government debt dropped to $967.8 billion in June, the lowest since May 2010 when it held $843.7 billion. In May, the world's second biggest economy had $980.8 billion in Treasuries, data showed. China's hoard of U.S. debt has seen multiple 12-year lows the last few months.

"This looks more likely a function of Chinese FX intervention to keep USD/CNY stable in a strong dollar environment," said Chris Turner, global head of markets at ING.

"A further decline in China's U.S. Treasury holdings looks likely as geopolitical spheres of influence sharpen after Russia's invasion of Ukraine and the seizure of Russian FX reserves.

Since hitting a roughly 20-month high in mid-May, the U.S. dollar has been largely stable against the Chinese yuan, sliding about 1%. The dollar was last up 0.5% at 6.7755 yuan .


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