MOSCOW – Two major countries have started to significantly reduce theirinvestments in dollar-denominated assets, namely US government debt –treasuries. Russia has sold off nearly all of them, while China hassignificantly decreased their share in the country’s portfolio.
The world’s two biggest holders of US Treasury bonds, Japan and China, havesold a significant portion of the American government debtlinkoverthe course of the last months, official data showslink.
Following a gradual increase in the amount of treasuries in its possessionuntil August 2019, Japan assumed first place in the list of foreignholders, surpassing China, which had long held the top spot. But inSeptember, it dumped a whopping $28.9 billion worth of US government debtout of a total of $1,174 billion.
The former leader in the list of US treasury holders, China, in turn, hassold around $10 billion worth of debt since June 2019. In total, betweenSeptember 2018 and September 2019, Beijing dumped $49 billion in UStreasuries amid its ongoing trade conflict with Washington.
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While the trade conflict could explain Beijing’s strategy, it does notexplain Tokyo’s sell-off. According to economists, the Federal Reserve hasbeen sending signalslinkbyreducing interest rates three times since July 2019.
The Fed brought the rates down to the 1.5-1.75% range on 30 October. Theanalysts noted that the regulator’s move had thereby reduced theprofitability of treasuries and could indicate the Federal Reserve’swillingness to further push rates downlinkuntilthey turn negative, Sputnik has reported.
