Banking behemoth ING has warned that BRICS nations are continuing to reduce their exposure to the U.S. Treasury market, after data showed China, India and Brazil collectively sold $28.8 billion worth of U.S. Treasury holdings in a single month.
What Happened
In a research note published this week, ING pointed to U.S. Treasury International Capital data for October showing a further decline in Treasury holdings among key BRICS economies.
China reduced its holdings by $11.8 billion, India by $12 billion and Brazil by $5 billion over the period, highlighting what the bank described as an ongoing, gradual retreat from U.S. government debt among the bloc.
ING cautioned that Treasury flow data is inherently volatile and should not be interpreted as evidence of an abrupt or disorderly exit from U.S. assets.
However, it noted that the steady decline in holdings among BRICS nations has become a persistent trend rather than a one-off adjustment.
Across the broader foreign official sector, holdings of U.S. Treasury bonds and notes fell by $22 billion in October, partially offset by an increase in short-term Treasury bill holdings.
The bank attributed part of India’s reduction to foreign-exchange intervention aimed at supporting the rupee, while also acknowledging that geopolitical considerations may be contributing to the broader pattern of reduced exposure among BRICS economies.
ING added that the trend stands in contrast to continued demand from private investors, who have remained willing buyers of U.S. Treasuries despite softer U.S. inflation data and shifting expectations around future Federal Reserve rate cuts.
Why It Matters
ING emphasized that its longer-term outlook for the U.S. dollar is not based on large-scale foreign selling of Treasuries, but rather on expectations that international investors may increasingly hedge their U.S. asset exposure.
Nonetheless, the bank said the persistent trimming of Treasury holdings by BRICS nations is a development that warrants close monitoring, particularly as global reserve managers reassess currency and duration risk amid changing geopolitical and monetary conditions.
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