While it is still a fraction of what China and Japan own, Saudi Arabia is increasingly purchasing more of the United States government’s debt. No wonder why President Donald Trump and his White House are still doing business with a repressive regime.
According to Treasury Department data, Saudi Arabia has increased its buying of Treasury securities from $162.6 billion in January to $176.6 billion in May.
This is the fastest increase for a foreign country in the first four months of 2019.
More from Bloomberg:
Indeed, even as the country’s holdings of Treasuries have jumped, its foreign-reserve assets have hardly budged. It’s a potential sign that Saudi Arabia is funneling more cash to plug its deficit as it ramps up domestic spending.
Yet in some ways, Saudi Arabia’s ownership of U.S. government debt has always been influenced by political considerations. For more than four decades, how much the kingdom actually held was kept secret from the public as part of a strategic agreement brokered during the Nixon administration. The unique arrangement bound together two countries that shared few common values, reshaping U.S.-Saudi relations for generations. It was only in May 2016 that the U.S. began releasing a detailed breakdown of Saudi Arabia’s holdings in response to a Freedom of Information Act request filed by Bloomberg News.
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Like a handful of other countries, Saudi Arabia has traditionally held its Treasuries across a number of global financial centers, according to longtime observers. And it’s likely the official tally understates the true size of the kingdom’s holdings, which is masked behind those of other countries. The recent uptick suggests to Setser the country now has less reason to obscure its investments from broader view than it did in the past.
This is a fascinating trend to witness, especially as China, Japan, and many other nations have decreased their acquisitions this year.
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