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Chinas holding of U.S. treasuries decline further

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Published on : Jun 18, 2014

According to a government report released in Washington, the holdings of China in the U.S. Treasuries has declined for its third straight month which is the longest stretch of declines since the year 2011. 

China followed by Japan is the largest foreign holder of Treasures. The Treasury Department stated in a monthly report that China held a total of USD 1.26 trillion in U.S. debt as of the month of April, and down USD 8.9 billion from the previous month.

According to an interest-rate strategist in New York this reduction could be related to China’s foreign-exchange reserve levels. However, according to the same interest-rate strategist the decline doesn’t give them much for buying Treasuries hand over first. He also said that the treasuries don’t represent the open value one would need to be buying them as an asset.

A Chinese government official stated last week that the accumulation of reserves by China will diminish after it hits a record in the first quarter. The last decline in the holdings of China in the U.S. Treasuries continued for a period of more than three months which took place in the final five months of 2011.

Official figures indicated that the reserves in China are the world’s biggest and were recorded at USD 3.95 trillion during the end of the first quarter. These holding got a boost by dollar purchases that weakened yuan during that period and by China’s present account surplus.

The current Treasury report indicated that the net outflow of long-term securities of US amounted to USD 24.2 billion after a net of USD 4.1 billion inflow in the month of March.

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