WASHINGTON (AFP) — Foreign investors sold a net 43 billion dollars in long-term US securities in January as the flow of capital turned negative, US Treasury data showed Monday.
The decline in foreign holdings was the steepest since August 2007.
The decline came after a revised capital surplus of 34.7 billion dollars December.
If the decline persists, it could spell trouble for the United States, which is issuing massive amounts of debt to finance its economic recovery efforts.
The Treasury data showed a decline in both private purchase and official government or central bank purchases of US securities, including US Treasury and agency bonds, and to a smaller degree, equities.
When short-term securities are added to the figures, it shows a capital deficit of 148.9 billion dollars.
For all of 2008, the US had a capital surplus of 609.9 billion dollars including 514.8 billion in long-term debt held by foreigners.
Last week, US officials scrambled to assure China that its hundreds of billions of dollars in US bonds were safe, after Premier Wen Jiabao expressed concerns about "the safety" of its investments.
Analysts say a loss of confidence in US Treasury securities could cause a dramatic drop in the dollar and force Washington to pay higher interest rates.
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