Long-term capital inflows to the US jumped in April to their highest since January as foreign investors took advantage of a weakening dollar to snap up US equities.
Net long-term capital inflows, excluding swaps, rose to $84.1 billion in April from $51.2 billion in March, the Treasury Department said on Friday. It was the largest inflow since January, when long-term flows were $99.2 billion. Overall, foreign purchases jumped to a net $111.8 billion worth of US securities in April, up from $30.1 billion in March.
"The numbers were pretty solid and more than enough to cover our current account needs for April," said Michael Woolfolk, a senior foreign exchange strategist at The Bank of New York. The United States needs to attract nearly $2 billion a day to help cover its trade deficit, which was $58.5 billion in April, and maintain the value of the dollar.
The Treasury Department also said net purchases of US Treasury bonds and notes plunged to $376 million versus $30.5 billion in March. The amount is the lowest since April 2006. In contrast, private net purchases of US equities jumped to a record $28.1 billion from $8.4 billion in March. Woolfolk said a decline in the dollar against most major currencies helped contribute to an increased demand for US stocks.