May 3, 2018 / 9:05 PM / 9 months ago

Foreign U.S. bond holdings at Fed hit 3-month low

May 3 (Reuters) - Foreign central banks’ holdings of U.S. Treasuries at the Federal Reserve declined to their lowest levels in three months as the dollar has strengthened since mid-April, Fed data released on Thursday showed.

The U.S. central bank’s custody holdings of U.S. government debt securities for overseas central banks totaled $3.048 trillion on May 2, down from $3.062 trillion the prior week.

Wednesday’s level was the lowest since $4.043 trillion on Feb. 7, according to Fed data.

Back on March 14, foreign official ownership of Treasuries at the Fed reached $3.109 trillion, which was the most on record.

The dollar reached a four-month high against a basket of currencies on Wednesday on solid U.S. economic data and rising U.S. yields.

Overseas central banks often pare their U.S. Treasuries holdings when the dollar strengthens to defend their currencies in a bid to stem capital outflows.

Foreign central banks can keep their U.S. bond holdings outside the Fed. (Reporting by Richard Leong; Editing by Lisa Shumaker)

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