Foreign central banks' holdings of U.S. debt drop to $2.69 trillion, the lowest level since 2012

According to the Financial Times, after the outbreak of the Iran conflict, international energy prices surged, impacting economies worldwide. To support their economies and maintain currency exchange rate stability, foreign central banks are selling U.S. Treasuries on a large scale.

This massive sell-off of U.S. debt by global central banks has also directly led to a continuous decline in their holdings of U.S. Treasuries at the Federal Reserve Bank of New York, which has now fallen to the lowest level since 2012.

Data from the Federal Reserve shows that since February 25, foreign official institutions have net sold U.S. Treasuries for five consecutive weeks, with total sales exceeding $82 billion. Their holdings have decreased to $2.69 trillion, the lowest since April 2012.

The core driver of this sell-off is the chain reaction triggered by the war: Iran's closure of the Strait of Hormuz caused energy prices to soar, impacting the finances of oil-importing countries, while also pushing the dollar to strengthen across the board.

To support their currencies, pay high-dollar oil bills, and cope with defense spending pressures, these countries are forced to liquidate their most liquid dollar assets to intervene in the foreign exchange market.

In summary, as central banks diversify their assets and reduce reliance on the dollar, the global reserve status of U.S. debt faces long-term challenges. If this trend continues, it will raise U.S. financing costs, reshape the international financial landscape, and undermine the foundations of dollar dominance.

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