By: Azhar Azam
Ratcheting up Treasuries purchases for the fifth consecutive month in June; China once again proclaimed the slot of largest foreign lending country to the United States of America, according to data released by US Treasury.
China invested another $44.3 billion in US holdings to oust Japan – who offloaded $21 billion for the month. America now owes $1,146.5 billion to China and $1,090.8 billion to Japan; posting total holdings to $6,171.3 billion.
The largest economy of the world has steadily piled up capital outflows to increase its debt since Trump took over the White House in January this year.
In 2016, China consumed nearly $320 billion of its forex reserves to control the yuan depreciation against US dollar.
This month, China foreign exchange reserves ticked up for ninth-consecutive month due to tighter controls on capital outflows and a weaker US dollar. Reserves rose by $24 billion last month to post record $3.08 trillion.
“The rise was mainly attributed to the increased value of non-US dollar assets in China’s forex exchange portfolio”, said Liu Jian, a senior analyst with the Bank of Communications in Shanghai.
As the US dollar index hit almost a year low, the Chinese currency advanced to its highest level since last October; forcing research houses to revise their currency valuation estimates, favoring yuan.
Ireland ($302.5 billion), Brazil (269.7 billion), Cayman Islands (254.0 billion), Switzeland ($244.5 billion), United Kingdom ($237.3 billion), Luxembourg ($211.7 billion), and Hong Kong ($202.6 billion) are the other largest, though distant of China and Japan, creditors to the United States.