The US debt

18 October 2011
China’s forex drop looks suspicious: analyst

China’s foreign-exchange reserves fell in September, racking up the biggest monthly drop on record and spurring skepticism from one analyst, who said the drop appeared deliberate.

- Bank of China last Friday showed China’s foreign exchange reserves fell $60.82 billion in September

- U.K.-based Capital Economics said in a note Monday it was unlikely that China sold any of its reserves to help support the value of the yuan during the month

- A portion of September’s drop could be attributed to changes in the value of underlying holdings.

- China could be seeking to cool the rate of growth in its multi-trillion dollar forex stockpile

19 October 2011
China cuts holdings of US debt after ratings downgrade. It has reduced its holdings of US debt to their lowest level in a year, after the US's credit rating was downgraded by Standard & Poor's (S&P).

Largest foreign buyer of US government debt sold $36.5bn (£23.2bn) in US Treasuries or bonds to cut its holding to $1,137bn in August, latest data by the US Treasury department showed.

"Asia countries are sitting on large dollar-denominated assets already, so they can afford to take a longer view," "They would have been the ones most concerned about a downgrade on their current holdings,"

Analysts said that the complete picture of China's Treasury holdings is in Europe.
China buys some of its Treasuries through London.
United Kingdom and Switzerland have been concerns that the debt crisis in some European economies may hurt growth in the region. They increased their holdings by almost $40bn each, while Japan increased its investment by $21.8bn to $936.8bn.

Last year, the Treasury department revised up China's holdings by $268bn when it published its revised figures.