Members of the BRICS group, including China and Saudi Arabia, are selling off US treasuries worth hundreds of billions of dollars.
China’s holdings of US Treasuries dropped from $938.8 billion in June 2022 to $835.4 billion in June 2023, according to newly released data from the Treasury Department. This is a drop of nearly $103.4 billion in only 12 months.
China is remains one of the top debtors of the United States, with its $1.105 trillion in assets ranking second only to Japan’s.
Saudi Arabia, a new member of the BRICS, cut its holdings of US debt by $11.1 billion, from $119.2 billion to $108.1 billion, over the same time period.
The two BRICS countries’ reduced holdings of US bonds represent a new front in the struggle against the dollar’s hegemonic status.
Further, Ziad Daoud, Bloomberg’s senior emerging markets economist, argues that the Saudi government’s shift toward riskier assets may affect the Federal Reserve’s stance on interest rates.
Increased dangers inside the country might lead to economic losses for the monarchy. The global reallocation of Saudi Arabia’s oil riches may push up interest rates in the United States.
While China and Saudi Arabia have been unloading their US Treasury holdings, the rest of the BRICS countries have been buying them up.
Between June 2022 and June 2023, India bought US debt securities totaling $26.6 billion. The UAE increased its US Treasury holdings by $25.1 billion over the course of the year, while Brazil increased its holdings by $1.3 billion.
