China, Japan increase holdings of US government debt in March

Total foreign ownership of US Treasuries amounted to about US$6.08 trillion in March.
Total foreign ownership of US Treasuries amounted to about US$6.08 trillion in March.PHOTO: AFP

WASHINGTON (BLOOMBERG) - Japan and China increased their holdings of US Treasuries as overall net foreign purchases in March reached the strongest in a year.

China increased its ownership of US government bonds, notes and bills by US$27.9 billion (S$38.99 billion) to US$1.09 trillion in March, remaining the second-largest foreign holder of American debt, according to a monthly Treasury Department report released on Monday (May 15). Japan, the largest non-US holder of government debt, increased its total to US$1.12 trillion, up US$3.4 billion from a month earlier.

Total foreign ownership of US Treasuries amounted to about US$6.08 trillion in March - the highest since September, but down from a peak of US$6.3 trillion a year earlier. Net purchases of US Treasury bonds and notes by foreigners were US$24.4 billion, the data show.

Demand by overseas creditors for US debt played a key role as the nation borrowed to revive its economy from the last recession.

The rise in China's Treasury holdings comes even as the nation tries to stem capital outflows and buttress the yuan through interventions in the currency market. The country's foreign currency reserves ticked up for third month to US$3.03 trillion in April, after falling below US$3 trillion in January. They are still down sharply from a record US$4 trillion in 2014.

Belgium's ownership of Treasuries, often seen as a home to China's custodial accounts, rose in March to $109 billion.

The report, which also contains data on international capital flows, showed net foreign buying of long-term securities totaling US$59.8 billion in March. It showed a total cross border outflow, including short-term securities such as Treasury bills and stock swaps, of US$700 million.