The Kingdom of Saudi Arabia has markedly increased its investments in US Treasury securities, with an infusion of $4 billion by June’s end, elevating its reserves to the highest since the onset of the 2020 pandemic.
Records from the Treasury Department reveal that the total value of Saudi holdings reached slightly above $140 billion at the halfway point of the year. This uptick aligns with similar actions by other prominent US debt holders such as China, the UK, and France, who are all seeking refuge in what is often regarded as one of the world’s most secure assets.
A key factor was taking advantage of the higher interest rate,
stated Monica Malik, a leading economist, highlighting the robust US dollar and liquidity of Treasuries as additional incentives.
Since April, the globe’s premier oil exporter has been steadily increasing its Treasury stakes.
Treasuries are traditionally sought after for their security, particularly during periods of global economic instability. By the close of June, the benchmark 10-year Treasury yield had ascended by 10 basis points, with current figures circling around 3.9%.
In 2020, as the Covid-19 pandemic wreaked havoc on international economies, Saudi Arabia reduced its US debt holdings. Concurrently, the nation’s central bank channeled $40 billion into its sovereign wealth fund, capitalizing on the downturn in equity markets for strategic stock investments.
Foreign ownership of US Treasuries experienced an overall increase in June, amounting to approximately $8.2 trillion.
With speculations of a potential Federal Reserve interest rate drop before year’s end, investors appear to be seizing the opportunity for higher yields presently available. Notably, the US consumer price index in July dipped to 2.9%, a three-year low.