Net overall capital flows into the United States rose to $64.1 billion in February from a revised $35.7 billion in January, the US Treasury Department said on Tuesday. The inflow was enough to cover February's trade deficit of $62.3 billion, and eased some concern that a credit crisis and an economic slowdown would dry up foreign investment.
The US dollar inched higher versus the euro and the yen after the release of the data. "The TICs data did not generally reflect financial market volatility, distress in the funding markets, dislocation since the crisis took hold last year," said Bob Lynch, head of G10 FX strategy, at HSBC Bank USA. "The fact that there weren't big outflows during the period helps the dollar."
Net long-term capital inflows, excluding swaps, totalled $72.5 billion, compared with a revised $57.1 billion inflow in January. The February net long-term inflow was the largest since May 2007.
The report also showed a net outflow from governments, central banks and other official institutions of $9 billion in February, from a revised $78.3 billion inflow in the prior month. The official capital outflow was the largest since a $26.3 billion outflow in September 1998, according to the data.
In contrast, net private capital inflow jumped in February to $73.1 billion from a revised $42.5 billion outflow in January. February net foreign purchases of US Treasury bonds and notes fell to $20.60 billion versus $35.97 billion in January.
Japan remained as the largest holder of US Treasury debt in February with a steady $586.6 billion in total securities. China, the No 2 holder of US Treasuries, decreased purchases that month with its total holdings falling to $486.9 billion from $492.6 billion in January. Meanwhile, purchases by the United Kingdom jumped to $180.7 billion in February from $157.2 billion in the prior month.
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