Treasury International Capital flows showed Brazil the biggest buyer of Treasurys in August (followed by Ireland and France), but it was China and ‘ally’ Japan that dumped the most Treasurys in the month…
Brazil is Steve Mnuchin’s best friend…
As China reduced their holdings of US Treasurys for the 3rd straight month…
Japan flipped to a seller again in August back to the lowest holdings since October 2011…
And while the Saudis were buying in August…
the broad trend among other majors has been selling…
All of which has driven the USDollar’s share of global central bank reserve to its lowest since 2013…
And, according to economist Zach Pandl at Goldman Sachs, Washington’s aggressive policy against Moscow could be the biggest driver behind the recent fall of the dollar’s share of global central-bank reserves, who noted that Russia’s Central Bank sold some $85 billion of its $150 billion holding of the US assets from April through June after the US Treasury Department announced new sanctions on Russian businessmen, companies and government officials.
At the beginning of April, as RT reports, Washington expanded its anti-Russian sanction list, including seven Russian tycoons, 12 companies and 17 senior government officials over alleged meddling in the 2016 US presidential election, and according to Pandl, the co-head of global FX and emerging-market strategy, the US policy of unilateral tariff hikes and sanctions is putting at risk the greenback that is still dominating the global currency reserves.
“The Central Bank of Russia likely sold a large portion of its dollar-denominated assets, and perhaps all of its US Treasuries held by US custodians, and transferred them to euro-denominated and yuan-denominated bonds in the second quarter,” the economist said.
“This would account for more than half of the decline in the share of dollar reserves during the quarter.”
According to the recent data revealed by the International Monetary Fund, share of the US national currency in the global central-bank reserves declined to 62.3 percent in the second quarter with holdings in the euro, yen and yuan gained as a share of allocated reserves.
“Sanction risk appears to explain a significant portion of the observed decline,” the analyst said.
“The dollar’s share of reserve assets could decline further if other large reserve holders were to make similar changes as the Central Bank of Russia over time.”
Remember, nothing last forever…
via RSS https://ift.tt/2RUBP6o Tyler Durden