WASHINGTON (AFX) -- Net foreign capital inflows into the United States increased to $86.9 billion in February, the largest net purchases since November, the Treasury Department said Monday.
Net foreign purchases of U.S. financial assets were $99.5 billion, while U.S. owners purchased a net $12.6 billion in foreign financial securities.
Net foreign capital inflows were revised higher to $69.1 billion in January.
So far, the inflows have been sufficient to fund the U.S. current account deficit, which rose to $805 billion in 2005. In 2005, foreign net inflows totaled $868 billion.
The data 'suggest no let-up in foreigners appetite for U.S. securities from the robust levels over the last couple of years,' said Rick MacDonald, head of research at Action Economics.
'Foreign private investors remain solid buyers of U.S. securities, providing important support for the U.S. dollar, even in the face of record current account deficits,' said Douglas Porter, an economist for BMO Nesbitt Burns.
All told, foreigners bought $21.9 billion in Treasurys, $30.5 billion of corporate bonds, $16.5 billion of corporate equities and $30.6 billion of agency bonds.
The bulk of buying came from the private sector, with $83.8 billion purchased, up from $59.4 billion in January.
Foreign central banks bought $15.7 billion of securities in February, down from $22.3 billion in January. The central banks bought $11.2 billion of Treasurys, $3.3 billion of corporate bonds and $1.9 billion of agency bonds. They sold $700 million of corporate equities.
Japanese entities held $673.1 billion in Treasurys at the end of the month, up $4 billion from January. Mainland Chinese owners held $265.2 billion, up $3.1 billion. Owners in the U.K. held $250.8 billion, up $5.6 billion. Owners in the Caribbean banking centers (largely hedge funds) held $91.1 billion, down $11 billion.
Foreign central banks held $1.28 trillion in Treasurys at the end of February, up $16.8 billion.
In a separate report, the New York Fed said its Empire state index showed factory activity grew at a slower pace in April. This story was supplied by MarketWatch. For further information see www.marketwatch.com.