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 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.

The announcement by the People's Bank of China that it has suspended treasury bond purchases due to the asset's scarcity highlights the limitations of its resources as it confronts an increasingly challenging economic environment.