China's holdings of US treasuries fall to lowest since 2013

[WASHINGTON] China's holdings of US Treasuries fell in July to the lowest level in more than three years, as the world's second-largest economy pares its foreign-exchange reserves to support the yuan.

The biggest foreign holder of US government debt had US$1.22 trillion in bonds, notes and bills in July, down US$22 billion from the prior month, in the biggest drop since 2013, according to US Treasury Department data released Friday in Washington and previous figures compiled by Bloomberg.

The portfolio of Japan, the largest holder after China, rose US$6.9 billion to US$1.15 trillion. Saudi Arabia's holdings of Treasuries declined for a sixth straight month, to US$96.5 billion.

The figures compare with official Chinese data showing that the nation's foreign-exchange reserves were little changed in July at US$3.2 trillion, though they're down from a peak of close to US$4 trillion in 2014. The reserves dropped US$16 billion in August to the lowest level since 2011.

The report, which also contains data on international capital flows, showed net foreign buying of long-term securities totaling US$103.9 billion in July. It showed a total cross-border inflow, including short-term securities such as Treasury bills and stock swaps, of US$140.6 billion.

Net foreign selling of US Treasuries was US$13.1 billion in July, while foreigners scooped up a net US$26.1 billion in equities, U$20.7 billion of corporate debt and US$38.9 billion in agency debt, according to the report.

BLOOMBERG