Hong Kong central bank cuts duration in US treasury holdings

HONG KONG, May 6 (Reuters) - Hong Kong's de-facto central bank has been reducing duration in holdings of U.S. treasuries US10YT=RR, its chief said on Tuesday, diversifying into other currencies and assets as volatility grows in dollar bonds.

The Hong Kong dollar has been among Asian units rallying recently as investors sought out home currencies after President Donald Trump's tariffs triggered recession fears, roiled financial markets and dented the U.S. dollar's credibility.

"Regarding our U.S. Treasury holdings, we've been reducing duration," Eddie Yue, the chief of the Hong Kong Monetary Authority, told a conference attended by media.

"During recent market volatility, you can see that longer-duration bonds were more impacted than shorter-duration ones," he said.

"For the rest of our investment portfolio, we've been diversifying into different currencies and asset classes."

Yue attributed recent recent U.S. bond volatility to factors such as U.S. tariff policies, investors' diversification needs and technical reasons.

"For the past few years, we've been reducing duration to position more defensively."

Hong Kong's Exchange Fund, which supports the Asian financial hub's dollar, had 79.1% of its assets in dollars by December 31, 2024, the HKMA's latest annual report shows, for its lowest level since 2014.