China cut holdings of US treasury bonds in June

2009-08-18 18:40 BJT

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The US Treasury Department says foreign demand for its long-term financial assets rose for the month of June. But looking at individual buyers, Japan and the UK increased their holdings, while Russia and number one holder, China, did the opposite and cut back.

The US treasury Department says a net 90.7 billion dollars worth of treasury bonds were bought in June alone, after sales of 19.4 billion in May.

However, the number one holder, China has cut back from more than 800 billion dollars in May to around 770 billion dollars by the end of June. The 3 percent drop is the largest so far this year.

Japan, the second largest holder, increased its holdings to more than 710 billion. The United Kingdom, which ranks number 3, raised its holdings to 214 billion, up 0.6 percent. Like China, Russia also cut its holdings of US financial assets in June.

Industry insiders say the structure of China's holdings has also changed. The country has been buying short-term bonds and selling long-term bonds in recent months. Short-term is better for liquidity, and comparatively safe.