India is 12th largest holder of US G-secs at $145 billion

India’s holdings in the US government securities (G-secs) touched a high of $144.7 billion at the end of 2017, data compiled by the US Treasury Department showed. India maintained its position as the 12th largest foreign holder of the US government securities after Saudi Arabia at $147.4 billion in December 2017, the report showed. Meanwhile, China leads the pack with an investment of $1.184 trillion closely followed by Japan with an exposure worth $ 1.061 trillion. Ireland stands at a distant third with holdings worth $326.5 billion. The holdings in the US government securities have been constantly increasing except for a few months last year. In December last year, the holdings were worth $118.2 billion, the US Treasury Department data said. The United Kingdom and Switzerland hold $250 billion and $249 billion of US government securities, respectively.

Among the BRICS nations, after China, Brazil is the second largest investor at  $256.8 billion followed by Russia at $ 102.2 billion. The fourth highest holder of the US government securities is Cayman Islands with a holding worth $ 269.9 billion, followed by Brazil ($ 256.8 billion), the UK ($ 250 billion), Switzerland ($ 249.6 billion), Luxembourg ($ 217.6 billion), Hong Kong ($ 194.7 billion) and Taiwan ($ 180.9 billion). In the last report released by the US Treasury Department in June 2017, total holdings under foreign portfolio stood at $ 18.44 trillion. From the total foreign portfolio, $ 7.19 trillion was invested in equities, $ 10.29 trillion was parked in long-term debt securities and $ 954 billion was exposed to short-term debt securities.

Meanwhile, Reserve Bank of India (RBI) last week notified Rs 5,000 crore as the limit for holding long positions in Interest Rate Futures (IRFs) for foreign portfolio investors (FPIs). At present, the foreign portfolio investment limit for government securities is exchangeable between investments made in Interest Rate Futures and government securities. On government securities’ utilisation reaching 90 percent, long positions by foreign portfolio investments in Interest Rate Futures are not allowed at present. In wake of this, the central bank allocated FPIs in a separate limit of Rs 5,000 crore for a long position in IRFs.

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