Saudi Arabia added $4 billion to its US Treasury holdings by the end of June, taking its stockpile to the highest level since the pandemic in 2020.
The amount stood at just over $140 billion at the end of the first half of the year, according to the latest figures from the Treasury Department. Other top US government debt holders, including China, the UK and France, also increased holdings in the world's safest asset.
"A key factor was taking advantage of the higher interest rate," according to Monica Malik, chief economist at Abu Dhabi Commercial Bank PJSC. The strength of the US dollar and the fact that Treasuries are a liquid asset were also factors, she said.
The world's largest oil producer has been adding to its holdings since April.
US Treasuries are traditionally known for being safe assets, especially at times of uncertainty in the global economy. The benchmark 10-year Treasury yield rose by 10 basis points by the end of June, and is currently hovering around 3.9%.
Saudi Arabia had drawn down its holdings of US debt in 2020, when the Covid-19 pandemic ravaged the global economy. That was also around the same time the central bank transferred $40 billion to the kingdom's sovereign wealth fund to finance a flurry of stock investments during a slump in equity markets caused by the pandemic.
Overall, foreign holdings of Treasuries rose in June to around $8.2 trillion.
With the possibility of a Federal Reserve interest rate cut before the end of this year, investors are likely taking advantage of securing higher yields now. In July, the US consumer price index fell to 2.9%, the lowest it's been in over three years.
