US treasuries safer bet in uncertain times
19 May 2010, 0038 hrs ,ET Bureau
Amid the crisis in the Eurozone, central banks across the world have flocked to the dollar by investing in US government bonds or treasuries, thereby reversing a four-month trend that saw them pull out of the greenback.
Central banks across the globe have hiked their exposure In US government bonds to $2,708.8 billion in March from $2,676.5 billion in February, according to the latest data released by the US treasury department.
Total foreign holdings of treasuries, including investments by other entities such as corporates and commercial banks, rose by around 3.5% to $3884.6 billion in March from $3752.2 billion in the previous month. This is the highest monthly rise in holdings since the sub-prime crisis deepened in September 2008 after the collapse of Lehman Brothers.
According to a treasury official of a local private bank, this reflects preference for safety that is seen in the US dollar by investors after the Euro crisis got worse. “Besides that, the US economy is slowly getting back on track,” he added.
Country-wise details showed that China led the pack of investors in hiking its investments in US treasuries from $877.5 billion in February to $895.2 billion in March.
Others to have increased their exposure to treasuries include Japan, the UK, the Caribbean and oil exporting countries. Even India increased its exposure by $400 million though it has a very small exposure to US treasury bonds at $32 billion.
The trend assumes significance at a time when China seems unwilling to bow to increasing global pressure, particularly from the US, to revalue the yuan. Canada’s finance minister, Jim Flaherty, told ET that his country was in favour of a flexible exchange rate system determined by market forces.
19 May 2010, 0038 hrs ,ET Bureau
Amid the crisis in the Eurozone, central banks across the world have flocked to the dollar by investing in US government bonds or treasuries, thereby reversing a four-month trend that saw them pull out of the greenback.
Central banks across the globe have hiked their exposure In US government bonds to $2,708.8 billion in March from $2,676.5 billion in February, according to the latest data released by the US treasury department.
Total foreign holdings of treasuries, including investments by other entities such as corporates and commercial banks, rose by around 3.5% to $3884.6 billion in March from $3752.2 billion in the previous month. This is the highest monthly rise in holdings since the sub-prime crisis deepened in September 2008 after the collapse of Lehman Brothers.
According to a treasury official of a local private bank, this reflects preference for safety that is seen in the US dollar by investors after the Euro crisis got worse. “Besides that, the US economy is slowly getting back on track,” he added.
Country-wise details showed that China led the pack of investors in hiking its investments in US treasuries from $877.5 billion in February to $895.2 billion in March.
Others to have increased their exposure to treasuries include Japan, the UK, the Caribbean and oil exporting countries. Even India increased its exposure by $400 million though it has a very small exposure to US treasury bonds at $32 billion.
The trend assumes significance at a time when China seems unwilling to bow to increasing global pressure, particularly from the US, to revalue the yuan. Canada’s finance minister, Jim Flaherty, told ET that his country was in favour of a flexible exchange rate system determined by market forces.
