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 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 said on Friday it has decided to suspend treasury bond purchases temporarily due to short supply of the bonds, triggering a jump in yields across tenors. The People's Bank of China (PBOC) said in a statement it would resume bond buying depending on supply and demand in the government bond market.