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US Economy on Brink of Collapse: Japan ditch US Dollar!
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Foreign governments heavily invest in U.S. Treasury securities, facing significant risks. Rising U.S. interest rates can decrease the market value of Treasuries, leading to potential losses during sudden rate hikes often triggered by inflation. Additionally, a weakening U.S. dollar diminishes the value of these investments when converted to other currencies, presenting a risk particularly for nations with volatile or strengthening currencies.
Threats of inflation can also reduce the real returns on U.S. Treasuries if the inflation rate exceeds the yields, which erodes the purchasing power of foreign reserves. Political and geopolitical tensions, such as U.S. debt ceiling debates, may disrupt market confidence and financial market access, increasing investment risk.
Furthermore, liquidity risks during financial crises can force large holders to sell at lower prices, negatively impacting market values. Countries with substantial holdings, like China and Japan, face concentration risks that could result in significant losses if the U.S. financial system struggles or if the dollar sharply declines, complicating their market exit strategies.
As of September 2024, Japan is the top international investor in U.S. government bonds, despite experiencing noticeable fluctuations in its investment levels over the year. In March 2024, Japan held U.S. Treasuries worth approximately $1.87 trillion. However, by May, this figure had reduced to about $1.128 trillion following cumulative sales of $59.5 billion, including a significant reduction of $22 billion in May after a $37.5 billion decrease in April.
Threats of inflation can also reduce the real returns on U.S. Treasuries if the inflation rate exceeds the yields, which erodes the purchasing power of foreign reserves. Political and geopolitical tensions, such as U.S. debt ceiling debates, may disrupt market confidence and financial market access, increasing investment risk.
Furthermore, liquidity risks during financial crises can force large holders to sell at lower prices, negatively impacting market values. Countries with substantial holdings, like China and Japan, face concentration risks that could result in significant losses if the U.S. financial system struggles or if the dollar sharply declines, complicating their market exit strategies.
As of September 2024, Japan is the top international investor in U.S. government bonds, despite experiencing noticeable fluctuations in its investment levels over the year. In March 2024, Japan held U.S. Treasuries worth approximately $1.87 trillion. However, by May, this figure had reduced to about $1.128 trillion following cumulative sales of $59.5 billion, including a significant reduction of $22 billion in May after a $37.5 billion decrease in April.
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