No need to worry too much about buying daily debt

Source: Internet
Author: User
Keywords Japan buy China
Japan does not have the rationale to limit the nature of the money in the market transaction, nor is it technically a commentator Guo Kai. The yen has surged again against the dollar in recent days.  In this context, Japanese government officials said recently that China has increased its purchases of Japanese government bonds in the short term, and that Japan cannot buy Chinese bonds when it can buy Japanese bonds, a situation that needs to be discussed and improved. The Japanese government's fears are understandable. However, the scope for achieving or negotiating between China and Japan is likely to be very limited in relation to the yen's exchange rate. While China's capital inflows remain tightly regulated, the key to the government's or other Japanese institutions ' ability to buy Chinese Treasuries is whether they hold enough money in renminbi and size. In fact, according to the latest notice issued by the Central bank in August, China allowed the offshore clearing house, the offshore central bank or the monetary department to participate in renminbi trade settlement, and to invest in renminbi bonds in the Bank of China bond market.  In other words, under China's new rules, Japanese institutions that have accumulated renminbi for trade settlement can buy Chinese government and institutional bonds. The next step is whether Japanese businesses and Japanese government agencies can actually buy Chinese bonds aggressively, provided they are willing to promote trade between China and Japan and more renminbi for settlement. If it can expand the amount of renminbi accumulated under Japan's clearing house trade, then it can invest in China's interbank bond market. As much as 19.5 trillion yuan in the interbank bond market, the market is fully capable of accepting the demand for renminbi bond investment from Japan. But in Japan, there is a process of accumulating renminbi funds. In the current Sino-Japanese trade, the U.S. dollar and the yen still dominate trade settlement. And whatever the attitude of Japan's business institutions, the renminbi trade settlement may not be willing to participate in the case of Japanese financial institutions and the Japanese government.  So it will take a long time for Japan to solve the problem of accumulating renminbi reserves. In addition, although there are channels for buying Chinese bonds, the Japanese government will not give any policy to expand the renminbi reserves in order to buy Chinese bonds, from the perspective of the yen's impact. For even if Japan were to buy renminbi bonds, its role in the exchange rate between the yen and the dollar could be very limited. The renminbi is a small factor in the exchange rate between the yen and the dollar.  Japan's bond market and currency markets are open, compared with Japan's huge net inflow of international payments and the overall size of the Japanese bond market, and the volume of purchases from China is negligible. In terms of Japan's market position as an international financial centre, it is likely and understandable that Japanese bond purchases from China will continue to rise for some time to come. If Japanese officials talk about the scope of the talks in the hope that China will control the speed of buying Japanese bonds in the short term of the sharp rise in the yen, then it may be possible, and for such a request, Japanese officials should also take into account the JapaneseTo promote the renminbi trade settlement, to give appropriate cooperation.  As an open market, Japan does not have the rationale to limit the nature of the money in market transactions, nor can it be technically done. Compared to the international currency status of the yen, the renminbi still has a long way to go. China-Japan bond transactions, regardless of the pace of future negotiations, which expands the settlement status of the renminbi and the international status, is the main goal should not be abandoned.
Related Article

Contact Us

The content source of this page is from Internet, which doesn't represent Alibaba Cloud's opinion; products and services mentioned on that page don't have any relationship with Alibaba Cloud. If the content of the page makes you feel confusing, please write us an email, we will handle the problem within 5 days after receiving your email.

If you find any instances of plagiarism from the community, please send an email to: and provide relevant evidence. A staff member will contact you within 5 working days.

A Free Trial That Lets You Build Big!

Start building with 50+ products and up to 12 months usage for Elastic Compute Service

  • Sales Support

    1 on 1 presale consultation

  • After-Sales Support

    24/7 Technical Support 6 Free Tickets per Quarter Faster Response

  • Alibaba Cloud offers highly flexible support services tailored to meet your exact needs.