China makes record purchases of Japanese debt

Tokyo: China was a net buyer of Japanese bonds for a sixth straight month in June which is the biggest annual increase on record dating from 2005, according to a report released today by the ministry of finance in Tokyo. China purchased a net 456.4 billion yen ($5.3 billion) of Japanese debt in June, which followed a net buy of 735.2 billion yen in May. 

According to the report, China's net purchases of Japanese debt amounted to 1.73 trillion yen for the first half of the year, which was nearly seven times as much as the figure for all of 2005. That year marked the biggest Chinese buying of Japanese bonds between 2005 and 2009.

For June, Chinese investors had bought a net 508.0 billion yen in short-term Japanese debt, which follows a record net buying of 694.8 billion yen in May, the ministry of finance data revealed.

However, they were net sellers of 51.6 billion yen in medium- to long-term Japanese bonds in June after being net buyers in May.

About two-thirds of the total buying for 2010 occurred in May and June alone, a period when the euro slid to four-year lows against the dollar on worries related to the sovereign debt crisis in the region.

Yields on Japan's benchmark 10-year bonds dropped to a seven-year low of 0.995 per cent on 4 August.