China's central bank suspended treasury bond purchases on Friday, briefly lifting yields and spurring speculation it is stepping up defence of the yuan currency which has been sliding since the election of Donald Trump as U.

The unexpected action is intended to tamp down a potential bubble in the bond market fueled by investors shunning riskier assets like stocks and real estate.

The People's Bank of China (PBC) announced on Friday that it has decided to temporarily suspend treasury bond purchases in the open market, starting from this month. The central bank said the decision was made as demand exceeded supply on the government bond market recently,

The bank halted its government bond purchases Friday in an attempt to slow a one-way bonds trade that's put unwanted downward pressure on the yuan, analysts say.

China's central bank is expected to deploy its most aggressive monetary tactics in a decade this year as it tries to stimulate the economy and soften the blow of impending U.S. tariff hikes, but in doing so it risks quickly exhausting its firepower.

China’s central bank expanded its gold reserves for a second month in December, signaling renewed appetite after temporarily pausing purchases last year as prices soared.

The People's Bank of China said Friday that it will suspend purchases of sovereign debt this month as the supply of the bonds has fallen short of demand. Christy Tan, investment strategist at Franklin Templeton Institute,