Oil exporters amass record U.S. bond holdings in crude price plunge

Tue Mar 17, 2015 2:30pm EDT
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* U.S. Treasuries seen as hedge against falling oil revenues

* Further oil drop may spur exporters' to spend FX reserves

By Richard Leong and Gertrude Chavez-Dreyfuss

NEW YORK, March 17 (Reuters) - The collapse in crude oil prices may have reduced revenues of oil exporters, but it has not soured their appetite for U.S. government debt.

Saudi Arabia and other major oil exporters have increased their holdings of U.S. Treasuries to record levels in an effort to counter the effect of the 60 percent drop in oil prices in the last nine months.

Global financial assets such as U.S. Treasuries, corporate debt, and equities have benefited from soaring oil prices over the last decade as producers funneled their oil windfall into these markets.

With the dollar hovering near a 12-year peak against a basket of currencies, OPEC and oil exporters are hedging the drop in their oil income from profits on a rising greenback. Crude prices fell to a six-year low this week.

Oil exporters' holdings of U.S. Treasuries grew to a record $290.80 billion in January from $285.9 billion in December, according to U.S. Treasury data.