Russia Liquidates Almost All of its US Debt, Starts Buying Gold

Russia Liquidates Almost All of its US Debt, Starts Buying Gold

Russia’s holdings of US Treasury bonds plummeted by $81 billion in July

Russia has continued to get rid of US Treasury bonds as the country’s share in American debt is arriving close to zero.

Russia was one of the biggest holders of US debt with a $180 billion investment.

In July CNN reported Russia’s holdings of US Treasury bonds plummeted by $81 billion, representing 84% of its total US debt holdings.

At the time, it sparked a guessing game about Moscow’s motivations, but there could be many factors.

One reason is the US sanctions against Russia, and the Federal Reserve is increasing interest rates making American bonds cheaper.

Broker at Otkritie bank Timur Nigmatullin told RIA Novosti: “A further sale of US Treasury bonds by Russia will most likely be compensated by buying gold and opening short-term deposits at banks.”

According to RT: The share of precious metals in Russia’s foreign reserves has relinquished a record 18 percent, almost nearing the share of dollar investments.

The largest investors in US debt, China and Japan, have also decreased their holdings.

Chinese holdings of US sovereign debt plummeted to $1.165 trillion in August, from $1.171 trillion in July, marking the third following month of drops.

Japan has cut its holdings of US securities to $1.029 trillion in August, the lowest since October 2011.

The reason for holding money in US bonds is global trade, which is still controlled by the dollar, director of macroeconomic analysis at Expert RA Anton Tabah told Izvestia daily.

So, countries are forced to have a lot of dollars in cash, and US bonds are the best option for that.

India and Turkey have followed Russia’s lead.

Turkey has fallen out of the top-30 list of holders of American debt, while India has been selling its investment for five consecutive months to $140 billion in August.

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