Turkey is 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.

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