Russia’s Treasury Holdings Continue to Drop

(Bloomberg Opinion) -- Because of a problem with data presented on the Bloomberg terminal, this column was based on incorrect information. Russia’s holdings of U.S. Treasuries actually were $14.097 billion in August, according to the Treasury Department’s website. They did not fall to zero as the column reported. 

Russia’s U.S. Treasuries holdings have found a new bottom. 

That’s one of the more interesting revelations from the Treasury Department’s monthly report on foreign holders of U.S. government securities. It’s not so much that it’s surprising — after all, Russia slashed its American debt pile by $81.2 billion in the two months through May 31, one of the most aggressive cutbacks from any country in recent memory.  

The country’s leaders have provided conflicting answers for the pullback. President Vladimir Putin said in July that Russia wasn’t abandoning the dollar. But Finance Minister Anton Siluanov said the plan was to cut ownership of American debt, curb reliance on the greenback and protect the Russian economy from any additional U.S. sanctions. It appears to be buying gold as a haven instead.

As Bloomberg News’s Natasha Doff reported in August, it might be that the Kremlin is “trying to pull off a balancing act.” Treasury data show that Belgium’s holdings of U.S. debt soared by $25 billion in the same period that Russia was liquidating. The Cayman Islands’ share also jumped. Analysts at the Council on Foreign Relations chalked up the shift to an attempt by Russia to protect against seizure.

Either way, this is a rare circumstance. When Russia, the 11th-largest economy, reportedly owns so little in Treasuries, but the Philippines, with one-fifth the gross domestic product, is a “major foreign holder” with $31 billion, something is clearly amiss on the foreign relations front. 

Russia’s Treasury Holdings Continue to Drop

Oh, and speaking of geopolitical tensions: Saudi Arabia’s U.S. Treasury holdings just so happened to reach a record high of $169.5 billion at the end of August. 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.

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