Interpac Business and Migration Solutions Melbourne Australia

(October 19, 2010)

AUSTRALIA pared its holdings of US Treasurys by as much as a quarter in August to its lowest level since June 2009.

The Reserve Bank of Australia's sell off of Treasurys in the month bucked a global trend when net capital inflows into long-term US debt assets increased, led by China which cemented its position as the world's largest holder of US federal bonds.

Analysts are closely watching data on global capital flows for any evidence the Reserve Bank, or RBA, is seeking to keep a lid on the Australian dollar's relentless upward march. Since the middle of the year, the high yield currency is up around 20 per cent against the US dollar. In August, the currency initially rallied for the month's first week to US92.22 cents from US90.56c, though ended the month weaker at US89.09c.

Australia held $US11.7 billion of Treasury securities in August, down from $US15.3bn in July, according to the latest official figures available.

The monthly Treasury International Capital report, known as TIC, highlights cross-border acquisitions of securities with maturities of more than one year, including non market transactions such as stock swaps and principal repayment on asset-backed securities.

(Source:theAustralian)