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Monday April 18, 12:18
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U.S. foreign investment hits records
(by Helen Snow)
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Foreign investment in U.S. assets remained strong in February, giving financial markets greater confidence in overseas investors’ ability to continue financing the record U.S. current-account deficit.
Foreigners snapped up $84.5 billion (€65.5 billion) in U.S. stocks and bonds in February, down from $92.5 billion in January, according to the latest data from the U.S. Treasury Department. "The outlook is for continued big purchases of U.S. securities," said Christopher Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi. "The risk of a dollar selloff is greatly reduced as long as the deficit is being financed. The U.S. remains a good place to invest for the world," he said.
Still, the dollar’s benefit from the stronger Treasury data seems questionable while U.S. economy continues to suffer from current-account gap. That suggests the U.S. econony may be entering a period of slower growth.
The monthly Treasury report showed that foreigners continued having little interest in debt securities issued by mortgage giants Fannie Mae and Freddie Mac and in purchasing of U.S. stocks. Foreigners give preferences to the U.S. Treasury debt and corporate bonds.
The purchasing of U.S. corporate bonds by foreigners increase totaling $32.1 billion in February, up from $18.6 billion in January.
Japan remained the largest foreign holder of U.S. Treasury securities, which totaled $702 billion in February. China, the second-largest holder, increased its holdings to $196.5 billion.
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