# How does keeping the value of the dollar by foreign US bondholders makes their exports more affordable?

How does this work?

In February 2018, China owned \$1.18 trillion of U.S. debt. It's the largest foreign holder of U.S. Treasury securities. The second largest holder is Japan at \$1.06 trillion. Both Japan and China want to keep the value of the dollar higher than the value of their currencies. That helps keep their exports affordable for the United States, which helps their economies grow. That's why, despite China's occasional threats to sell its holdings, both countries are happy to be America's biggest foreign bankers. China replaced the United Kingdom as the second largest foreign holder on May 31, 2007. That's when it increased its holdings to \$699 billion, outpacing the United Kingdom's$640 billion.

• SE uses something called "MathJax" that allows users to write things in Math format. For instance, it turns x^2 into $x^2$. It uses dollar signs as markers for the beginning and end of what to turn into math formatting. So if you have two dollar signs in your question, that can fool the system into thinking you want it in MathJax. – Acccumulation May 22 '18 at 16:06
• If there is high demand to hold something, its price will be higher than if there is low demand to hold that thing. If what you have to trade (USD) is worth more, then you can get more with it. – nathanwww Jun 21 '18 at 22:23
• No doubt holding a trillion in US treasuries will have a favourable impact on exports to the US due to exchange rate effects. But it's not like there's many places to park a trillion dollars. Which alternative financial holding would you recommend to the central bank of China instead of the USD? For example, if they were to commit to slowly sell 100 billion USD over 12 months, where else should they put it? – nathanwww Jun 21 '18 at 22:31