Foreign central banks have reduced their holdings of U.S. Treasury bonds to the lowest level since 2012

According to the Financial Times, foreign central banks have reduced their holdings of U.S. Treasury bonds to the lowest level since 2012 in order to support their domestic economies and currencies during the war in Iran.

Since February 25, the value of Treasury bonds held in custody at the New York Federal Reserve Bank by official institutions has decreased by $82 billion. Some central banks have intervened in the foreign exchange market to support their domestic currencies. Such interventions typically involve selling dollars to respond to crises. Since February 27, the Turkish central bank alone has sold $22 billion worth of foreign government bonds.

Analysis indicates that supply shocks have put immense pressure on global central banks.