China, Russia, Norway, Brazil, Taiwan Dump US Treasuries
by Wolf Richter
WolfSreet.com
October 8, 2015
Five large purchasers of US Treasuries – China, Russia, Norway, Brazil, and Taiwan – have changed their minds. They’re dumping Treasuries, each for their own reasons that are now coinciding. And at the fastest rate on record.
For the 12-month period ended July, sales of Treasuries by central banks around the world reached a net of $123 billion, “the biggest decline since data started to be collected in 1978,” the Wall Street Journal reported.
China, the largest foreign owner of Treasuries – its hoard peaking at $1.317 trillion in November 2013 – has been unloading with particular passion. By July, the latest data available from the US Treasury Department, China’s pile was down to $1.241 trillion. But in August, the real selling started when the yuan suddenly spiraled down further after its devaluation. Panicked, and fearful of losing control over their currency, officials at the People’s Bank of China sold Treasuries and bought yuan to stabilize the currency.
That month, China’s foreign exchange reserves, which include a variety of currencies, dropped by a record $93.9 billion. And in September, they dropped another $43.3 billion, to $3.51 trillion. It was the fifth month in a row of declines. The Journal:
Internal estimates at the PBOC show that it spent between $120 billion and $130 billion in August alone in bolstering the yuan’s value, according to people close to the central bank.
Russia unloaded $32.8 billion in Treasuries in the 12-month period ended in July; Norway, which like Russia was hit by the oil price rout, sold $18.3 billion, and Taiwan $6.8 billion.
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