“There Was a Stampede by Foreign Investors to Exit Their U.S. Dollar Investments”

An article in Bloomberg includes the following quote:

There was a stampede by foreign investors to exit their U.S. dollar investments,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Everyone wants to bring their money home. It’s not about return on capital. It’s whether you can get your capital back.”

As AFP points out:

Foreign investors sold a net 43 billion dollars in long-term US securities in January as the flow of capital turned negative, US Treasury data showed Monday.

The decline in foreign holdings was the steepest since August 2007.

The decline came after a revised capital surplus of 34.7 billion dollars December.

If the decline persists, it could spell trouble for the United States, which is issuing massive amounts of debt to finance its economic recovery efforts.

Indeed, there are indications that America’s biggest creditor – China – is diversifying out of the dollar.

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