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17 Mar 2014
Flash: US Treasuries - if it were not Russia - FXStreet
FXStreet (Barcelona) - Alena Afanseva, FXStreet Analyst comments that recent FED data on the amount of treasuries held by foreign central banks triggered a new wave of speculations about “Russia going off-shore”, as presently custody holdings dropped to $2.86 trln suspiciously, coinciding with the eve of the Crimea referendum, and the possible US sanctions against Moscow.
Key Quotes
“However, Russia is not the only suspect in this case. China has long been rumored to start diversification of its impressive reserves away from dollar assets, and most probably it has already started to implement its plan. The latest US Treasury data shows that ‘the Celestial Empire’ sold approximately $48 billion worth of U.S. Treasurys in December - the largets decline since December, 2011.”
“If China starts reducing the dollar holdings, it will need to find the alternative, and the euro is the best choice. A pause. Only the lazy haven’t noticed the recent impressive strength of the single currency on the back of mixed fundamentals, and high possibility of additional easing from the ECB.”
“Besides, the USD/CNY and EUR/CNY moves show the impressive divergence in favor of the euro, and hardly the full swing of the single currency may be explained by the capital inflows and the contraction of the ECB’s balance sheet.”
Key Quotes
“However, Russia is not the only suspect in this case. China has long been rumored to start diversification of its impressive reserves away from dollar assets, and most probably it has already started to implement its plan. The latest US Treasury data shows that ‘the Celestial Empire’ sold approximately $48 billion worth of U.S. Treasurys in December - the largets decline since December, 2011.”
“If China starts reducing the dollar holdings, it will need to find the alternative, and the euro is the best choice. A pause. Only the lazy haven’t noticed the recent impressive strength of the single currency on the back of mixed fundamentals, and high possibility of additional easing from the ECB.”
“Besides, the USD/CNY and EUR/CNY moves show the impressive divergence in favor of the euro, and hardly the full swing of the single currency may be explained by the capital inflows and the contraction of the ECB’s balance sheet.”