Japan re-emerges as leading creditor of U.S.

Investing.com – Japan today re-emerged as the leading creditor of the U.S., as China has sold off its foreign exchange holdings to support its own currency, the renminbi.

China’s ownership of U.S. Treasuries fell by $41.3 billion to $1.12 trillion in October, according to a report by the U.S. Treasury Department released Thursday, marking the sixth straight month of slippage.

Japan’s holdings fell by $4.5 billion to $1.13 trillion for the same time-frame, according to the Treasury Department.

Described as a “stunning development” by one leading economist, Beijing’s forex holdings have dramatically dropped by about 25% since early 2014 to just over $3 trillion. The Central Bank is seeking to support the renminbi, which has fallen more than 15 per cent against the U.S. currency, with its forex sales.

The sell-off of Treasuries holdings is part of an overall campaign by Beijing to stem capital outflows, especially to the U.S. The communist government is regulating Chinese companies’ foreign acquisitions and dividend remittances for foreign investors.

The holdings data seem to show that the Chinese were responding to Donald Trump’s nationalistic rhetoric on the campaign trail last fall. Investors expect faster U.S. growth under president-elect Donald Trump, and his come-from-behind win in November has sent the U.S. dollar soaring.

Hillary Clinton, the defeated Democratic candidate for President, last night told donors at a Christmas party in Manhattan that she blamed purported “Russian hacking” of her campaign’s sordid e-mail exchanges for her defeat, not Trump’s nationalistic views and tough talk on China during the 2016 campaign.

The US Dollar Index today was down, at approximately 1:15 p.m. Eastern, to 102.73, a decline of 0.35%.

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