Japan, China lead foreign government retreat from U.S. Treasurys as Gulf War fallout stokes currency fears
Foreign governments reduced their U.S. Treasury holdings in March due to currency pressures from the Middle East conflict. China and Japan led the selloff, with Japan's holdings dropping significantly. Overall, foreign holdings fell to $9.25 trillion as central banks sought to stabilize local currencies amidst rising inflation fears.
- ▪China's U.S. Treasury holdings decreased to $652.3 billion, the lowest since September 2008.
- ▪Japan, the largest foreign holder, reduced its holdings by approximately $47 billion to $1.191 trillion.
- ▪Overall foreign holdings of U.S. Treasuries fell from $9.49 trillion in February to $9.25 trillion in March.
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Foreign governments cut U.S. Treasuries in March as the Middle East war forced central banks to liquidate dollar reserves, defending local currencies against an energy shock that sent exchange rates tumbling.China reduced its holdings to $652.3 billion, down roughly 6% from February to the lowest level since September 2008, according to U.S. Treasury data released late Monday stateside. Japan, the single largest foreign holder of U.S. government debt, shed approximately $47 billion to $1.191 trillion. Overall foreign holdings fell to $9.25 trillion in March from $9.49 trillion in February. The selloff came as the outbreak of the U.S.-Iran conflict and a subsequent surge in crude oil prices sent the Japanese yen and other Asian currencies tumbling.
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