Saudi Arabia has increased its holdings of US Treasury bills and bonds by $2.4 billion, reaching $142.7 billion in July 2024. This move was made in anticipation of a US interest rate cut announced the same month, with the aim of benefiting from the attractive returns on these safest debt instruments in the world. The Kingdom’s holdings at the end of July were the highest since March 2020, coinciding with the pandemic, when they were at $159.1 billion.
On a year-on-year basis, Saudi Arabia increased its holdings by 31 percent with purchases worth $33.5 billion during the year, up from $109.2 billion in July 2023. The Kingdom’s holdings of US bonds have been steadily rising until the pandemic hit, leading to a reduction in holdings before resuming buying again since July 2023. This means that Saudi Arabia has been buying for the 12th consecutive month.
The figures mentioned only include Saudi investments in treasury bonds and bills, and do not take into account other investments in securities, assets, and cash denominated in US dollars. Moreover, global holdings of US bonds rose by 1.6 percent in July on a monthly basis to reach $8.34 trillion. Japan maintained its position as the largest investor in US debt instruments, even though its holdings declined to $1.12 trillion in July. China followed Japan as the second-largest investor with investments totaling $776.5 billion.
The increase in Saudi Arabia’s holdings of US Treasury bills and bonds reflects the Kingdom’s confidence in these safe debt instruments, especially in times of uncertainty such as the ongoing pandemic. The attractive returns offered by US debt instruments amidst the highest interest rates in over 20 years have led Saudi Arabia to boost its investments in this sector. This move also demonstrates Saudi Arabia’s strategy to diversify its investment portfolio and benefit from global economic developments.
Saudi Arabia’s consistent buying of US bonds and bills for the past 12 months highlights the Kingdom’s long-term investment approach and its commitment to maximizing returns on its assets. As one of the largest investors in US debt instruments, Saudi Arabia has solidified its position in the global financial market. The Kingdom’s strategic investment decisions aim to secure stable returns and preserve wealth in a dynamic and fluctuating global economic landscape.
With Saudi Arabia’s holdings of US Treasury bills and bonds reaching a record high in July 2024, the Kingdom is set to strengthen its position as a key player in the global financial market. The increase in holdings reflects Saudi Arabia’s confidence in the stability and reliability of US debt instruments, as well as its proactive approach towards maximizing returns on its investments. As the global economy continues to navigate through challenging times, Saudi Arabia’s strategic investment decisions will play a crucial role in ensuring financial stability and wealth preservation for the Kingdom.
