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Caribbean, China holdings of US debt climb in March

Published:Sunday | May 17, 2015 | 5:00 AM

Foreign holdings of United States debt rose in March as China ramped up its purchases and displaced Japan as the leading owner of US Treasury securities.

The US Treasury Department says overseas ownership of US debt rose 2.1 per cent in March to US$6.18 trillion. That is below January's record of US$6.22 trillion.

China added US$37.3 billion of Treasury debt, bringing its stockpile to US$1.26 trillion. That's ahead of Japan, which added just US$2.5 billion, lifting its total to US$1.23 trillion.

In February, Japan became the leading owner of US debt for the first time since August 2008. China overtook Japan that year as the Great Recession, higher government spending and a steep drop in tax revenue pushed up US government borrowing.

The US deficit topped US$1 trillion from 2009 through 2012.

Foreign governments, primarily through their central banks, account for two-thirds of the foreign holdings. In March, the total held by foreign governments rose one per cent from the previous month to US$4.13 trillion.

A group of oil exporting nations, which includes Saudi Arabia, Iraq, Algeria, Venezuela and Nigeria, added US$500 million to bring their holdings to US$297.3 billion, the third largest. Caribbean banking centres, a group that includes The Bahamas and the Cayman Islands, added US$10.9 billion, lifting their holdings to US$293 billion, the fourth largest.

Demand for US Treasuries, widely considered one of the world's safest investments, is likely to remain strong. While US interest rates are still low, they may climb later this year if the Federal Reserve begins to raise interest rates.

- AP