BEIJING - Overseas investors raised their holdings of Chinese bonds for the 26th straight month in January, fueled by faster-than-expected economic recovery and a firming currency.

Overseas investors held a total of 3.06 trillion yuan ($473.6 billion) of Chinese bonds in January, surging 62.09 percent from the same period last year, said China Central Depository Clearing Co Ltd.

The volume marked an increase of 5.96 percent from the end of 2020.

Market transactions were also robust, with the volume amounting to 588.3 billion yuan last month.

Growing appetite since 2020 among global investors stemmed from China's stable economic recovery, widening spread of Chinese 10-year government bonds over their United States counterparts and a strengthening yuan, said Zheng Kuifang, an analyst at China Construction Bank.

With a strong rebound in the fourth quarter, China's economy expanded 2.3 percent in 2020, becoming the only major economy to achieve positive growth in the COVID-19-ravaged year.

Although the yield on 10-year US government bonds gradually ticked up and the yuan's exchange rate against the US dollar stabilized, analysts expect the rush of buying into China's bond market to extend into 2021 as the proportion of Chinese bonds in global asset allocations remains low.

Meanwhile, as global index-providers raise the weighting of Chinese government bonds in their benchmarks, foreign flows into the bond markets will continue to gather steam.

Overseas investors will likely plow 1.2 trillion yuan into China's bond market in 2021, said Liu Linan, head of Deutsche Bank's Greater China Macro Strategy.

By the end of 2021, the share of foreign holdings in yuan bonds will increase to 3.3 percent from the current 2.9 percent, while the share of foreign holdings in China's treasury bonds will rise to 12 percent from the current 9 percent, Liu predicted.