Investors slow purchases of long-term US assets

WASHINGTON: International investment in US long-term assets slackened in November as the dollar weakened and purchases of stocks declined. Purchases of equities, notes and bonds slowed to a net $68.4 billion, from a revised $85.3 billion in October, the Treasury Department said Wednesday in Washington.

Including short-term securities, such as Treasury bills and so-called non-market transactions such as stock swaps, foreigners picked up a net $74.9 billion, up from $60.4 billion.

Concerns that the dollar, which lost ground in November, will extend its drop have dissipated as recent reports showed a strengthening labour market and signs of a bottoming in the housing industry. The dollar fell to a 20-month low against the euro in November, a loss it has since partly recouped.

���The dollar remains supported by foreign investment,��� Michael Woolfolk, a senior currency strategist at Bank of New York in New York, said before the report. ���Neither Asian central banks nor Opec petrodollars have backed out of the bond markets, and the rally in the stock market at the end of last year also dragged in investment.���

The US trade deficit was $58.2 billion in November. Some economists say the difference between the deficit and securities purchased by foreigners is an indicator of how easily the US can finance its external obligations. The current-account gap, a broader measure of trade that includes investment income and transfers, widened to a record $804.9 billion in 2005.

Private investors bought a net $101 billion of long-term securities in November, compared with a net $78.9 billion in October. Official purchases, mostly by central banks, increased by $6.5 billion, down from $25.3 billion the previous month. Foreigners accumulated a net $1.77 billion in Treasury notes in November after selling a net $3.2 billion the prior month.

The Fed left its benchmark rate unchanged at 5.25% for a third consecutive meeting on October 25, a sign policy makers were confident inflation will slow. China and the UK raised their holdings of US government debt, while Japan and oil-producing countries pared their holdings.

Japan, the largest holder of US Treasury securities, reduced its holdings by $2.2 billion to $637.4 billion. China, the second-largest holder, lifted holdings by $1.5 billion to $346.5 billion.

Major oil exporters ��� a group that includes the 11 Opec members, Ecuador, Bahrain, Oman and Gabon ��� sold a net $800 million of US securities. The UK, which, through London, acts as a transit point for international investors, especially those in the Middle East, added a net $16 billion. Caribbean banking centers, which analysts link to hedge funds, accumulated a net $7.3 billion.