Selling off U.S. bonds | Global central banks' total holdings of U.S. bonds drop to a 14-year low

According to foreign media reports, since the outbreak of the Iran war, central banks around the world have sold $81.5 billion worth of U.S. Treasuries.

Weekly data shows that, as of March 25, the total amount of U.S. Treasuries held by global central banks and other official institutions and custodied at the Federal Reserve Bank of New York has fallen to $2.69 trillion, the lowest level since April 2012, down from $2.78 trillion as of February 25.

The decline in U.S. Treasury holdings by central banks reflects the Iran war’s outbreak, during which the Strait of Hormuz was blockaded, driving energy prices sharply higher—dealing a blow to the public finances of oil-importing countries and also fueling broad U.S. dollar strength. Oil-importing nations such as Turkey, India, and Thailand were hit first; those countries have had to pay higher dollar-denominated oil prices, forcing them to draw on foreign exchange reserves to intervene in the FX market in order to support their domestic currencies and prevent further depreciation from pushing up the cost of imported energy. Data shows that since the day before Iran was attacked, the Turkish central bank has sold about $22 billion in foreign government bonds, with the vast majority in the form of U.S. Treasuries.