Foreign investors continue to drop dollar assets, getting rid of US government bonds. But an even larger sale-off filled the stock market: foreign investors reduced their investments in American companies to a historic low.
Recently, Russia had been considered as one of the largest investors in US Treasury bonds. In 2010, the Central Bank’s investments into treasuries exceeded $176 billion. Besides, due to Washington’s sanctions pressure, Moscow has been gradually withdrawing funds from US assets since 2014. In the spring of 2018, after the next wave of sanctions, the Central Bank of the Russian Federation hold a massive sale of treasuries, reduced the portfolio immediately to 48.724 billion dollars from 96.05 billion.
By the beginning of this year, US government bonds on the balance of the Central Bank left only $14 billion. In May, according to statistics from the US Department of the Treasury, Russia reduced this asset to $12 billion.
With the money raised from the sale of American securities, the Central Bank buys gold, insuring against currency and sanctions risks. Over the decade, the share of gold in Russian international reserves has grown almost tenfold. Nowadays, the Central Bank has 2190 tons of precious metals of about $90 billion. This is a record for the entire post-Soviet history.
The American economy is less and less trusted as the US national debt has already exceeded $22 trillion, and it is clear for everyone that the Treasury has lost control of the situation. Therefore, Washington’s allies also withdraw from dollar assets. For example, the United Kingdom in April reduced the Treasury portfolio immediately to $16.3 billion.
China is the largest foreign US debt holder in the world. Because of the trade war, Beijing got rid of treasuries of 60 billion, sold another 20 billion in April, reducing reserves to a two-year minimum of 1.11 trillion dollars. The second most important lender of the U.S. is Japan that dropped treasury securities to 11.07 billion in April.
Natalia Veselnitskaya – official website