BRICS Members Dump Billions of US Treasuries
Several members of the BRICS economic alliance are disposing of assets backed by the US government. The latest figures from the Treasury Department reveal that China is leading this trend, reducing its holdings of US treasuries by $13.6 billion in just one month. Despite still being the second-largest foreign holder of US treasuries globally, China has sold a total of $117.4 billion worth of US government debt in the past year.
Brazil has also decreased its stash of US treasuries by about $2.7 billion, while India has reduced its holdings by $2.3 billion. Additionally, the United Arab Emirates saw a drop in its US treasury trove by $300 million.
China Trims US Treasuries to Defend Yuan
A recent report from Nikkei Asia suggests that China is trimming its US treasury holdings to protect the yuan against a strong US dollar. The Chinese yuan fell to $0.136 against the dollar, a level last seen in January 2008.
When countries sell US treasuries, the capital collected can be used by their central banks to buy local currency on the open market, which aims to increase its value.
Hot Take: BRICS Members Reduce Holdings of US Treasuries
China, Brazil, India, and the UAE have collectively dumped $18.9 billion worth of US treasuries in just one month. This move reflects a growing trend among these BRICS nations to reduce their holdings of assets backed by the US government. China’s decision to trim its US treasury holdings is driven by its efforts to defend its currency against a strong US dollar. As these countries sell off their treasuries, it allows their central banks to accumulate local currency, potentially boosting its value. This shift in asset allocation could have significant implications for the global economy and financial markets.
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