By MARTIN CRUTSINGER
BUSINESS APR. 16, 2015 – 06:55AM JST
The Treasury Department said Wednesday that Japan overtook China in February as the top foreign holder of U.S. Treasury securities, a position Japan last held in August 2008.
In its latest report, the department says that total foreign holdings of Treasury debt dipped 0.9 percent in February to $6.16 trillion, down from a record of $6.22 trillion in January.
The holdings of China, normally the top holder of Treasury debt, slipped 1.2% to $1.22 trillion. Japan’s fell 1.1% from January. China’s decline was a bit larger, allowing Japan to jump into the top spot, $700 million above China.
China overtook Japan for the top spot in ownership of U.S. Treasury debt in 2008 as the financial crisis and a deep recession pushed up U.S. government borrowing to finance government deficits. The U.S. deficit topped $1 trillion annually for four consecutive years.
Private analysts had been forecasting that Japan would surpass China’s holdings of Treasury debt this year given current trends in currency markets that have seen the value of the dollar rise sharply versus the Japanese yen.
Japan’s holdings of Treasury debt are $13.6 billion higher than they were a year ago, while China’s holdings are $49.2 billion lower than a year ago. China is being pressured by the Obama administration to allow its currency to rise in value against the dollar.
American manufacturers have complained for years that China is manipulating its currency, keeping it undervalued against the dollar as a way to gain trade advantages. A weaker Chinese currency compared to the dollar makes American goods more expensive in China and Chinese goods cheaper for U.S. consumers.
Categories: Current Affairs