In the week ended March 12, the Federal Reserve’s custody holdings of U.S. Treasuries plummeted by $US104.5 billion, marking what was far and away the single-largest weekly withdrawal on record.
The massive drop fuelled speculation that Russia had moved a large portion of its holdings out of the U.S. in order to avoid asset freezes from impending financial sanctions.
Custody holdings have been falling in recent weeks and months as central banks in emerging markets have been forced to liquidate dollar assets in order to prop up their own currencies, which have come under pressure, but the size of the move seemed far too large to be explained by such activity.
The Fed just reported custody holdings data for the week ended March 19, and the numbers are sure to add to the confusion.
As the chart shows, custody holdings increased by $US32.3 billion this week.