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Last week it was also announced that Russia and Brazil had joined China in plans to diversify their debt holdings by becoming the first countries to buy a new bond to be issued by the IMF. Russia said some reserves may be moved out of U.S. dollars to fund the IMF purchase. However, one analysts said the move appeared to be more of a political statement rather than a serious attempt to diversify their assets away from their large holdings in U.S. debt.
June 16 (Bloomberg) — Brazil, Russia, India and China are considering buying each other’s bonds and swapping currencies to lessen dependence on the U.S. dollar, Russian President Dmitry Medvedev’s top economic adviser said.
TREASURY INTERNATIONAL CAPITAL DATA FOR APRIL
Net foreign acquisition of long-term securities, taking into account adjustments, is estimated to have been negative $8.8 billion.
Foreign holdings of dollar-denominated short-term U.S. securities, including Treasury bills, and other custody liabilities decreased $39.4 billion. Foreign holdings of Treasury bills decreased $44.5 billion.
Monthly net TIC flows were negative $53.2 billion. Of this, net foreign private flows were negative $58.4 billion, and net foreign official flows were $5.2 billion.
Originally posted by rattan1
Lets assume that China decides to Ditch the US$, they cannot do so without causing panic on the market which will see the US$ fall like a sack of rock and China will not be able to get rid of all its US$ quickly enough to avoid massive losses. So it is not in the interest of BRIC to allow the $ collapse without sustaining massive losses.
So, one would assume despite the gloomy economic picture, China has been buying more USD each month than selling for the last year.
It was the first month since June 2008 that Beijing failed to purchase more US T-bills.
Originally posted by RolandBrichter
It appears that China is hedging against a dollar collapse...they are buying commodities at a fever pace...exchanging dollars for items with intrinsic value as fast as they dare...if the dollar goes kaput, commodities will skyroket, leaving China and all nations with a huge natural resource store (Russia) at a comparative advantage...
Of course, nothing is written in stone here...just making observations and trying to connect the dots
Zhao said the sell-off could have been in order to pay for its own economic stimulus package.
The dollar’s status has come into question as leaders of the BRIC nations consider substituting other assets for their dollar holdings
Russian central bank First Deputy Chairman Alexei Ulyukayev’s comment on June 10 that Russia may sell some of its U.S. bonds to buy International Monetary Fund notes helped push 10-year yields on Treasuries to the highest level since October.
A 30-year Treasury auction this week showed overseas demand for U.S. government securities remains robust. Indirect bidders, a class of investors that includes foreign central banks, bought 49 percent of the $11 billion in bonds, the biggest percentage since the Treasury reintroduced the 30-year security in 2006.