China has increased its holdings of U.S. debt for a seventh consecutive month, exceeding the $100 billion level, according to data released by the U.S. Department of Treasury on Tuesday.
In August, China remained the largest foreign creditor to the U.S. for a third consecutive month, increasing its holdings of government debt by $34.5 billion month-on-month to a total $1.2 trillion, a record in the past 12 months.
Some analysts have said that the Chinese government was probably buying U.S. government debt to stem the yuan's appreciation.
The $34 billion rise in China's Treasury holdings in August was the largest monthly growth since July 2016, as the Chinese central bank bought Treasury securities for a seventh straight month.
China's holdings rose to $1.2 trillion in August, making it the largest non-U.S. holder of Treasuries. Since January, China has added nearly $150 billion in U.S. debt.
"No one knows exactly why China is doing what it's doing. But I think part of the reason for the increase in Treasury holdings is that the Chinese central bank is trying to slow down the appreciation of the renminbi," said Cheng Chen, interest rate strategist at TD Securities in New York.
The yuan has gained nearly 5 percent against the U.S. dollar so far this year, after falling 6.5 percent in 2016.
The world's second-largest economy had to sell some of its U.S. Treasury holdings for most of last year as the yuan weakened amid a surge in capital outflows.
Japan, meanwhile, was the second-largest non-U.S. holder of Treasury debt, with $1.1 trillion, slipping $12 billion for the month.
Global central banks overall increased their holdings of Treasury securities to $6.27 trillion in August, from $6.25 trillion the previous month.
Data also showed that foreigners bought Treasury debt of $11.49 billion in August, after selling $490 million in July, data showed.
Foreign investors also sold U.S. stocks in August amounting to $5.34 billion, after outflows of $7.66 billion in July.
Foreigners have sold U.S. stocks for three straight months.
