Russia Dumps $900 Million More in US Treasuries as Total Investment Hits Historic Low

Once one of the largest holders of US debt, Moscow has gradually whittled away at its T-Bill stocks and dollar holdings after 2014 over the crisis in Ukraine, switching to euros, yuans, gold and other alternative investments and stores of value.

Russia has continued to reduce its holdings of US debt, with total investment dropping from $3.7 billion to $2.4 billion in November 2021, fresh US Treasury data published Tuesday has revealed. Russian investment now includes $2.3 billion in short-term bonds, and $101 million in long-term bonds, according to the Treasury.

Russian investment in US debt has dropped to just 1.3 percent of its 2010 peak of $176.3 billion over the past twelve years, with Russia tumbling from the ranking of the top 15 holders of US debt in 2018.

In January 2014, at the onset of the Ukraine crisis, Russia held $131.8 billion in US government securities, dropping its holdings to $66.5 billion by April 2015, before growing them again to over $100 billion by the spring of 2017. In 2018, after getting slapped by new US sanctions, Russia’s Treasury holdings plummeted again, this time to just $14.9 billion. They have continued to drop since, hitting $10 billion in 2019, $6 billion in 2020, and $3.9 billion by September 2021.

Along with Treasuries, Russia has gradually slashed its holdings of US dollars in its National Wealth Fund reserve cushion, with holdings dropping to zero last July and replaced with euros, yuan, Japanese yen and gold. Moscow has also sought to ink trade agreements with countries like China, India and Turkey to make trade deals using local currencies, rather than dollars or euros. In 2019, Russian oil giant Rosneft switched to euros for its export contracts.

Japan remains the number one holder of US debt, with its holdings growing by $20.2 billion and reaching $1.34 trillion as of November 2021. China, the second-largest holder, is holding on to $1.081 trillion in US securities. Britain, Luxembourg and Ireland round out the top five, with $621.6 billion, $333.4 billion and $331.3 billion, respectively. Total global holdings of US treasuries by non-US residents currently stands at $7.75 trillion.

Economists have long argued that US Treasuries are a ‘safe haven’ for global investors and nations looking to park their money in a low-interest but low risk, guaranteed return investment. Critics of the system have claimed that Treasuries serve as a form of tribute, since US officials and those in other countries know that the United States will never be able to pay back its debt, which is rapidly approaching $30 trillion.

Late last year, amid squabbling between Republicans and Democrats on whether or not to raise the debt ceiling, Americans and the world found out just how close Washington came to the precipice of an economic meltdown after Treasury Secretary Janet Yellen warned that America would run out of cash and be unable to pay creditors if the limit was not raised immediately.