Saudi Arabia’s holdings of US Treasury bonds as part of foreign assets held by its central bank rose in October to a 4-year high.
US Treasuries, as a share of total foreign assets held by the Saudi central bank, rose to nearly 35% last month, according to data compiled by Bloomberg. This puts them at the highest level since February 2020 at the start of the coronavirus pandemic.
The country’s investments in US government bonds have soared this year, and the Saudi central bank now holds $144 billion in US Treasuries even as its total foreign assets fall to the lowest level since February.
Although the latest increase came before the US elections in November, Saudi Arabia’s larger holdings of US government bonds may help strengthen the Kingdom’s relationship with the incoming administration of President Donald Trump.
Saudi Crown Prince Mohammed bin Salman enjoyed a close relationship with Trump during his first term, something that is expected to continue once the American billionaire returns to the White House.
In a sign of how Saudi Arabia is already positioning itself to approach the new US administration, Yasser Al-Rumayyan, head of the Saudi sovereign wealth fund and a close ally of Prince Mohammed bin Salman, sat next to the president-elect at a UFC bout in New York earlier this month.
In February 2020, the Saudi Central Bank’s holdings of US Treasury securities peaked at more than 37% of foreign assets, before declining rapidly as the Saudi government tapped its reserves to finance a $40 billion transfer to the sovereign wealth fund to buy stocks damaged by panicked investors. Regarding the impact of the Corona virus.
Saudi Arabia’s foreign assets fell from about $500 billion at the beginning of 2020 to about $411 billion at the end of October due in part to the transfer to the Public Investment Fund, but also with its use of reserves to help finance government spending.
