Turkish lira crisis: Turkey has been quietly dumping US debt

US
President Donald Trump talks to Turkey’s President Recep Tayyip
Erdogan at NATO headquarters in Brussels, Belgium on July 11,
2018.

Tatyana
Zenkovich/Pool via REUTERS

• Turkey reduced its holdings of US debt by 12% between
  May and June.
• The sell-off came before the diplomatic spat between
  the US and Turkey.
• The news follows Russia’s sell-off of US Treasuries
  from $96.1 billion in March to an eleven year low of $14.9
  billion in May.

Turkey’s holdings of US sovereign debt dropped by 12% between May
and June.

The country’s US Treasury bond holdings fell to $28.8 billion in
June from $32.6 billion the month before,
Zero Hedge and
RT reported. Since the end of last year, Turkey has
reportedly liquidated 52% of its US bonds, bills, and notes.

The liquidation of US bonds in Turkey came in May before the
US-Turkey dispute erupted. The US imposed sanctions on Turkey
following the arrest of a North American Pastor in the country.
Turkey has since responded with sanctions of its own.

Earlier this year, a US Treasury report showed that
Russia has also decreased its holding of US government debt,
from $96.1 billion in March to an eleven year low of $14.9
billion in May.

“The whole world can see that the dollar’s monopoly is precarious
and dangerous for many,”
Russian President Vladimir Putin said in May. “Our gold and
currency reserves are being diversified, and we’ll continue to do
that further.”

The movements led some investors to speculate that China could
follow suit and sell-off US debt. China is the largest foreign
investor in US debt with around $1.18 trillion in US Treasuries.

China’s Vice Finance Minister Zhu Guangyao told CNBC earlier this
year that the country had
no plans to dump its US Treasury Holdings as it is a “responsible
international investor.”

US debt stands at more than $21 trillion as of June 2018 and is
projected to be almost equal to US GDP by 2028.