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Japan bumps China as top holder of US Treasury debt.

The Japanese central bank, meanwhile, is engaged in an aggressive effort to boost the country's money supply to bolster the economy and fight low inflation.

Washington -- Japan overtook China in February as the top foreign holder of US Treasury securities, a position Japan last held in August 2008.

In its monthly report on bond holdings, the Treasury Department said on Wednesday total foreign holdings of Treasury debt dipped 0.9 per cent in February to $6.16 trillion, down from a record of $6.22 trillion in January. The holdings of China, normally the top holder of Treasury debt, slipped 1.2 per cent to $1.22 trillion. Japan's fell 1.1 per cent from January. China's decline was a bit larger, allowing Japan to jump into the top spot, $700 million above China.

China overtook Japan for the top spot in ownership of US Treasury debt in 2008 as the financial crisis and a deep recession pushed up US government borrowing to finance government deficits. The US deficit topped $1 trillion annually for four consecutive years. Private analysts had been forecasting that Japan would surpass China's holdings of Treasury debt this year given current economic trends in both nations.

China's economy has been slowing and growth of its exports has been tapering, giving the country less to invest overseas. It has also been seeking to diversify those investments, leaving less to invest in US government bonds.

The Japanese central bank, meanwhile, is engaged in an aggressive effort to boost the country's money supply to bolster the economy and fight low inflation. That means there is more money to invest overseas. Japanese investors have been attracted to dollar holdings because of higher rates of return on dollar-denominated investments.Sung Won Sohn, an economics professor at the Smith School of Business at California State University, Channel Islands, sees those trends continuing, with Japan's holdings of Treasury debt growing faster than China's.

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Publication:Khaleej Times (Dubai, United Arab Emirates)
Geographic Code:9JAPA
Date:Apr 16, 2015
Words:334
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