Japan overtakes China as largest holder of US debt
Japan has overtaken China as the largest holder of US government debt, according to a report by the US Treasury Department.
The monthly report, released on Wednesday, showed that Japan held more than $1.224 trillion in US government securities at the end of February, ending China's six-year run as the top holder of US debt.
Since February 2014, Japan increased its US debt holdings by $13.6 billion while China’s holdings dropped by $49.2 billion as it sold more US Treasuries during the month of January.
China had been purchasing US government securities to keep its currency pegged to the US dollar. The policy helped lower the value of the yuan, making China’s exports more competitive in foreign markets.
Faced with a slowing economy, China is now shedding more of its US debt as a means to prevent too much weakening of the yuan against the dollar.
In contrast, Japan is now buying more financial assets, including US Treasuries, to lower the value of the yen against foreign currencies in order to spark more investment activity in the country.
Overall, international investors like overseas central banks, hedge funds, insurers, asset managers held $6.16 trillion of US government debt at the end of February.
The US Federal Reserve remains the single biggest holder of US government debt, owning around $2.5 trillion worth of Treasuries, up from around $800 billion at the end of 2007.
HRJ/HRJ
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