China's central bank said on Friday it has suspended treasury bond purchases, triggering a jump in yields and spurring speculation that the move was aimed at defending a falling currency.

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 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.

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 has hit pause on government-bond purchases, citing excess demand. The People's Bank of China has already moved to support the country's flagging currency, through sett