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As of the end of the first half of this year, Saudi Arabia held slightly more than $140 billion in U.S. Treasuries. By the end of June, Saudi Arabia had increased its holdings of U.S. Treasuries by $4 billion, bringing its inventory to its highest level since the outbreak of the epidemic in 2020.
At the end of the first half of this year, that figure was just over $140 billion, according to the latest data from the U.S. Treasury. Other major holders of U.S. Treasuries, including China, Britain and France, have also increased their holdings of the world’s safest asset.
“A key factor is to take advantage of higher interest rates,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank PJSC. She said a stronger dollar and the fact that U.S. Treasuries are a liquid asset were also factors.
The world’s largest oil producer has been increasing its oil reserves since April.
U.S. Treasuries are traditionally known as safe assets, especially during times of global economic uncertainty. As of the end of June, the benchmark 10-year Treasury yield rose 10 basis points and is currently hovering around 3.9%.
Saudi Arabia reduced its holdings of U.S. Treasuries in 2020 as the coronavirus pandemic ravaged the global economy. At the time, the Saudi central bank transferred $40 billion to the Saudi sovereign wealth fund to finance a large number of stock investments during the stock market crash caused by the pandemic. Overall, foreign holdings of U.S. Treasuries increased to about $8.2 trillion in June.
With the Federal Reserve likely to cut interest rates before the end of the year, investors may take advantage of the opportunity to grab higher yields. In July, the U.S. consumer price index fell to 2.9%, the lowest level in more than three years.
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