TOKYO (MNI) – As part of its efforts to diversify investment
overseas, Japan plans to buy a total of $10 billion (Y780 billion) worth
of yuan-denominated bonds issued by the Chinese government under a
proposed bilateral currency and financial agreement, the Nikkei reported
on Tuesday.

Japanese and Chinese officials are working out plans to have the
pact signed when their leaders meet for a summit on Sunday, said the
business daily.

Tokyo plans to use its foreign exchange fund special account, along
with the joint establishment of a green investment fund.

Japan has been trying to diversify its forex fund special account,
which now focuses on liquid dollar investments. It also aims to
strengthen economic cooperation with China by supporting that nation’s
efforts to turn the yuan into a more international currency.

Thailand and Nigeria are among the countries that hold
yuan-denominated government bonds through their central banks.

“Tokyo and Beijing believe that having a developed nation like
Japan maintain a certain amount of yuan-denominated holdings may help
lift the Chinese currency’s standing on the international stage,” the
Nikkei said.

China’s government bond offerings totaled 1.4 trillion yuan in
2009, up 55% on the year, it said.
** Market News International Tokyo Newsroom: 81-3-5403-4835 **

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