16 June 2007

China Sells Treasuries, Signaling Diversification

Or is China actually signaling their irritation with our posturing protectionist senators?

Bloomberg.com: Worldwide
China Sells Treasuries, Signaling Diversification (Update1)
By Kevin Carmichael and Ye Xie

June 15 (Bloomberg) -- Chinese investors sold more U.S. Treasury securities in April than any time in at least seven years, a signal the nation may be diversifying the world's largest foreign-exchange reserves.

China, which owns more U.S. debt than any foreign nation except Japan, sold a net $5.8 billion of Treasuries, the first drop in holdings since October 2005, according to Treasury Department figures that go back to 2000. The nation held $414 billion of the $4.4 trillion of marketable Treasuries in April, according to today's report.

China, whose reserves reached $1.2 trillion in March, and other Asian and oil-exporting nations are seeking to lift returns on their investments. That may push up yields on Treasuries, traditionally among the top investments for reserves, and erode demand for the dollar.

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