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Global Investment in U.S. Assets Hits Record

From Bloomberg News

International investment in U.S. securities swelled to a record $116.8 billion in August, more than double economists’ forecasts, led by increased purchases of Treasuries.

The increase compares with July’s $32.9 billion, which was the lowest since May 2005, the Treasury Department said Tuesday. The figure exceeds the $56.5 billion median estimate of 14 analysts surveyed by Bloomberg News.

Demand for U.S. assets jumped in August as the Federal Reserve ended two years of interest-rate increases and reports showed a combination of easing inflation and greater consumer spending.

The surge in investment helps explain the resilience of the dollar even as the trade deficit widens to a record.

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“There’s no evidence confidence in the U.S. is weakening,” said Steve Pearson, chief currency strategist in London at HBOS, Britain’s biggest mortgage lender. “This number is very strong. It gives you an idea why the dollar has held up.”

International purchases of U.S. securities previously peaked at $102.6 billion in October 2005 and averaged $71.6 billion over the 12 months through July. The average over the previous five years was $57.8 billion.

The dollar strengthened in the minutes after the report’s release, and later retreated to be little changed after separate figures showed that U.S. industrial production fell.

The dollar ended at $1.255 a euro, from $1.253 on Monday.

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