Photo taken on March 3, 2020 shows U.S. dollar banknotes in Washington D.C., the United States.Photo:Xinhua
China's holdings of US Treasury bonds increased for the second consecutive month in February to reach $1.092 trillion before COVID-19 became a global pandemic, but analysts forecast China may reduce holdings as there is uncertainty regarding the US dollar as a global currency following the US' massive quantitative easing (QE).
Data from the US Treasury Department showed Wednesday that China increased holdings of US Treasury bonds by $13.7 billion in February, the second rise since June 2019.
Meanwhile, foreign holdings of US Treasury bonds hit a record high of $7.066 trillion in the month, with Japan remaining the largest holder.
However, market analysts forecast that Beijing may continue to trim US Treasury bonds in the coming months, as the US Federal Reserve's QE program, along with a recession in the US, will further depreciate the greenback.
There is great uncertainty over whether the US dollar will remain a global currency, given the US' irresponsible move of injecting unlimited liquidity to the world, Dong Dengxin, director of the Finance and Securities Institute at Wuhan University, told the Global Times on Thursday.
"China may flexibly fine-tune its holdings of US bonds based on the US economy and the value of greenback," said an analyst who did not want to be identified.