TOKYO - China sold a net 177.3 billion yen ($2.15 billion) of Japanese bonds in December, capping the biggest yearly decrease since at least 2005, after the yen and benchmark government debt fell in November.
China sold a net 243.5 billion yen in short-term Japanese debt and bought 66.1 billion yen in long-term bonds, Japan's Ministry of Finance said in a statement on Tuesday. That resulted in net sales of 467.7 billion yen in 2010.
"As upward pressure on the yen has taken a pause, it seems China sold short-term notes to take profit," said Tetsuya Inoue, chief researcher for financial markets at Nomura Research Institute in Tokyo, a unit of Japan's largest brokerage. "On the other hand, China probably wants to have some yen-denominated assets in the long term, since Japan is a big trading partner."
The yen dropped 3.9 percent in November against the dollar, the first decline since April. Yields on 10-year Japanese government debt climbed 26.5 basis points, or 0.265 percentage point, in November, the biggest surge since April 2008.
Japan's government bonds had a 1.2 percent loss in November, according to indices from Bank of America Merrill Lynch. Japan's currency has fallen 1.7 percent over the past three months against the Group of 10 developed-nation currencies, Bloomberg Correlation-Weighted Currency Indices show. The dollar is down 0.2 percent, while the euro slid 2.7 percent.
The yen traded at 82.31 per dollar as of 12:35 pm in Tokyo on Tuesday. The yen touched 80.22 per dollar on Nov 1, the highest since April 1995.
The United Kingdom was the largest buyer of Japanese securities in December.