DUBAI: Saudi Arabia strategically increased its holdings of US Treasury bills and bonds by $2.4 billion in July this year, a rise of 1.7 per cent, culminating in a total of $ 142.7 billion.
The decision was heavily influenced by the anticipated cut in US interest rates, as announced by authorities, which is expected to enhance the appeal of these secure financial instruments.
The current high interest rates—the highest observed in over two decades—have rendered US Treasury securities particularly attractive to investors seeking stable returns.
Data from the US Treasury Department highlights that Saudi Arabia’s holding of $142.7 billion represents the highest level since March 2020, when the figure reached $159.1 billion amidst the onset of the COVID-19 pandemic.
US rate cut fuels hope
Furthermore, despite these fluctuations, Saudi Arabia maintained its position as the 17th largest investor in US debt instruments as of July 2024. This reflects not only a tactical approach to diversifying its investment portfolio but also an indication of confidence in the stability and reliability of US Treasury securities.
Over a year-on-year timeframe, Saudi Arabian investments in US bonds surged by 31 per cent, equating to an increase of $33.5 billion from $109.2 billion in July 2023.
The consistent buying trend, which has persisted for twelve consecutive months since July 2023, underscores a deliberate strategy to leverage favorable market conditions while seeking to mitigate risks associated with economic volatility.
It is important to note that the reported figures pertain solely to Saudi investments in US treasury bonds and bills, excluding other forms of investments in US dollar-denominated assets.
In the broader context of global investments in US bonds, total holdings experienced a monthly increase of 1.6 per cent, reaching $8.34 trillion.
Japan continued to lead as the largest investor despite a decrease in its holdings to $1.12 trillion, while China’s investments also saw a reduction, falling to $776.5 billion.
