SHANGHAI: China’s yuan held steady on Friday against the US dollar as yields for Chinese government bonds rose across the curve amid hints from the central bank that it could embark on large-scale bond sales.

The People’s Bank of China (PBOC) has hundreds of billions of yuan worth of medium- and long-term bonds at its disposal to borrow and sell, it said on Friday - part of plan markets see as an effort to cool a powerful bond rally.

Higher China government bond yields and a narrower spread against US treasury counterparts could help alleviate pressure on the yuan, said Samuel Tse, economist at DBS.

Not everyone was convinced, however, that the PBOC could have a lasting impact.

The “forces pushing down yields seem unlikely to reverse anytime soon,” Julian Evans-Pritchard, head of China Economics at Capital Economics, wrote in a note to clients.