Foreign investors sell U.S. assets

By TAVIA GRANT

Monday, May 16, 2005 Updated at 12:21 PM EDT

Globe and Mail Update

International investments in U.S. securities dropped to $45.7-billion (U.S.) in March from $84.1-billion in February, the U.S. Department of Treasury said Monday, further evidence that foreign central banks may be diversifying their holdings away from U.S. assets.

The March inflows fell well short of the $70-billion economists polled by Bloomberg had expected. Moreover, it is below the $65-billion to $75-billion that is needed to cover the U.S. current account deficit and outflows of foreign direct investment, according to a report by Adam Cole, senior currency strategist at RBC Capital Markets in London.

Overseas central banks were net sellers of U.S. assets for the first time since September 2002, he wrote. March's selling of U.S. dollar-denominated assets by official holders was the largest since August 1998, he said.