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POLITICAL ECONOMY
Foreign, China buys of US securities strong in April
by Staff Writers
Washington (AFP) June 15, 2011

Foreign demand for US securities remained strong in April despite worry about the country's debt level, with China buying more Treasury bonds for the first time since October, the Treasury said Wednesday.

Net foreign buying of US long-term securities -- incoming foreign investment less outgoing US investment in foreign debt -- rose by $30.6 billion in April.

Driving that was foreign government investment in US government debt while private investors pared their buys of debt while boosting holdings of US stocks.

China's closely watched purchases of US debt rose $7.6 billion to $1,152.5 billion, the first month-on-month rise since Beijing's holdings peaked at $1,175.3 billion in October and steadily dropped since, according to Treasury data.

China is by far the biggest foreign holder of US debt, and any shift in its demand has the potential to impact the US government's cost of borrowing.

Moreover, with US Republicans blocking an increase in the country's already maxed-out $14.29 trillion debt ceiling, bond investors are increasingly on edge as the country nears August 2, when the US government could be forced to default on its obligations without a ceiling hike.

Japan remained the second-largest foreign buyer of US debt, holding $906.9 billion at the end of April, down $1.0 billion from March, the data showed.




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