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The U.S. net international investment position at yearend 2009 was -$2,737.8 billion (preliminary), as the value of foreign investments in the United States continued to exceed the value of U.S. investments abroad (table 1). At yearend 2008, the U.S. net international investment position was -$3,493.9 billion (revised). The $756.0 billion change in the U.S. net investment position from yearend 2008 to yearend 2009 reflected (1) price appreciation of U.S.-held foreign stocks that surpassed the price appreciation of foreign-held U.S. stocks, (2) appreciation of most major currencies against the U.S. dollar that raised the dollar value of U.S.-owned assets abroad, and (3) “other” changes (such as changes in reporting panels and capital gains and losses from the sales of direct investment assets) that raised the value of U.S.-owned assets abroad more than the value of foreign-owned assets in the United States. The impact of these differences was partly offset by net foreign acquisitions of financial assets in the United States that exceeded net U.S. acquisitions of financial assets abroad. The following are highlights for 2009: * Foreign acquisitions of financial assets in the United States, excluding financial derivatives, were $305.7 billion in 2009, down from $454.7 billion in 2008. In 2009, foreign residents, including foreign official institutions, purchased more U.S. Treasury securities and U.S. stocks than they sold, and foreign direct investment in the United States increased. These financial inflows were partly offset by a decrease in U.S. banks’ liabilities to foreign residents and by foreign residents’ net sales of U.S. corporate and agency bonds. * U.S. acquisitions of financial assets abroad, excluding financial derivatives, were $140.5 billion in 2009, a shift from $156.1 billion in net sales of assets in 2008. In 2009, U.S. banks’ claims against foreign residents and U.S. direct investment abroad increased, and U.S. residents bought more foreign securities than they sold. These financial outflows were partly offset by a decrease in U.S. government assets resulting from the reversal of currency swaps between the U.S. Federal Reserve System and foreign central banks, and by a decrease in U.S. nonbanks’ claims against foreign residents. * U.S. holdings of financial derivatives as assets (with positive gross fair value) decreased $2,615.4 billion, and as liabilities (with negative gross fair value) decreased $2,583.7 billion. These large changes are mainly due to decreases in U.S. claims and liabilities from interest-rate and credit- default swap contracts. Because changes to U.S. assets and liabilities are offsetting, they have little impact on the U.S. net investment position. * Price increases in most foreign stock markets raised the value of U.S. holdings of foreign stocks by a large amount. Price increases in the U.S. stock market also raised the value of foreign holdings of U.S. stocks, but by a smaller amount. In 2009, prices of financial assets such as stocks and corporate bonds rose sharply but prices of U.S. Treasury securities and agency bonds fell. * Appreciation of most major foreign currencies against the U.S. dollar from yearend 2008 to yearend 2009 raised the dollar value of U.S.-owned assets abroad, especially the value of U.S.-owned foreign stocks. U.S.-owned assets abroad decreased $865.8 billion to $18,379.1 billion. U.S. holdings of financial derivatives as assets (with positive gross fair value) decreased $2,615.4 billion to $3,512.0 billion. U.S. official reserve assets increased $110.1 billion to $403.8 billion, mostly as a result of price appreciation of U.S. gold stock and new allocations of special drawing rights to the United States by the International Monetary Fund. U.S. government assets other than official reserve assets decreased $541.3 billion to $82.8 billion, as a result of the reversal of swaps under temporary reciprocal currency arrangements between the U.S. and foreign central banks to provide dollar liquidity to foreign banks during the financial crisis. The stock of U.S. direct investment abroad at current cost increased $308.4 billion to $4,051.2 billion, mostly as a result of reinvested earnings (see box). U.S. holdings of foreign securities increased $1,485.3 billion to $5,471.0 billion, mainly due to increases in the prices of foreign stocks held by U.S. residents. Claims on foreigners reported by U.S. banks increased $387.7 billion to $4,064.1 billion. Claims on foreigners reported by U.S. nonbanks decreased $0.5 billion to $794.2 billion. Foreign-owned assets in the United States decreased $1,621.8 billion to $21,116.9 billion. U.S. holdings of financial derivatives as liabilities (with negative gross fair value) decreased $2,583.7 billion to $3,384.1 billion. Foreign official assets in the United States increased $433.8 billion to $4,373.8 billion, mostly as a result of especially strong net foreign official purchases of U.S. Treasury securities. Foreign private holdings of U.S. securities other than U.S. Treasury securities increased $666.4 billion to $5,287.2 billion, mainly due to increases in the prices of U.S. stocks held by foreign residents. The stock of foreign direct investment in the United States at current cost increased $151.4 billion to $2,672.8 billion, mostly as a result of financial inflows (see box). The stock of U.S. currency abroad increased $12.6 billion to $313.8 billion. Liabilities to private foreign residents reported by U.S. banks decreased $211.6 billion to $3,593.6 billion. Liabilities to private foreign residents reported by U.S. nonbanks decreased $66.1 billion to $665.5 billion. Foreign private holdings of U.S. Treasury securities decreased $24.7 billion to $826.2 billion. _______________________________________________________________________________ Valuation Methods for Direct Investment Direct investment at current cost is BEA's featured measure of direct investment in current-period prices. The current-cost method values the U.S. and foreign parents' share of their affiliates' investment in plant and equipment using the current cost of capital equipment, in land using general price indexes, and in inventories using estimates of their replacement cost. Direct investment at market value is an alternative measure of direct investment in current-period prices. The market-value method values the owners' equity component of the direct investment position using indexes of stock market prices. The historical-cost method values assets and liabilities at their book value. Country and industry detail can be shown only under this method. Data on this basis are not presented in this release. _______________________________________________________________________________ * * * Revisions Revisions to the U.S. international investment position statistics reflect the ongoing effort to modernize and enhance BEA’s international economic accounts and newly available source data. Modernization BEA is completing the implementation of the latest international guidelines on the treatment of allocations of special drawing rights (SDRs) by including the reserve-related liabilities in “other U.S. government liabilities” (table 1, line 31). As a result, the U.S. international investment position statistics are revised for 1976-2008. Permanent debt between affiliated banks, bank holding companies, and financial holding companies is reclassified from direct investment (table 1, lines 18 and 35) to U.S. claims and liabilities reported by U.S. banks and securities brokers (table 1, lines 23 and 42). Position statistics are revised for 2007 and 2008. Newly available source data for 2007 and 2008 The revised position statistics for 2007 and 2008 also reflect new data from the annual surveys of multinational companies’ operations as well as new and updated data from the quarterly surveys of direct investment, the shift of several U.S. nonbanking entities to bank holding companies at the end of 2008, the incorporation of results from the U.S. Treasury Department’s annual survey of U.S. Ownership of Foreign Securities for December 2008, and the benchmark survey of Foreign-Residents’ Holdings of U.S. Securities for June 2009. The previously published U.S. net international investment position at yearend 2008 was -$3,469.2 billion. Revisions to the U.S. net international investment position from all sources were $224.2 billion for 2007 and -$24.6 billion for 2008. A more detailed discussion of the U.S. net international investment position at yearend 2009 and revised historical data will appear in the July issue of the Survey of Current Business. That issue will also contain an article about historical-cost direct investment positions, with detail by country and industry, and revised direct investment historical data. * * * BEA’s national, international, regional, and industry estimates; the Survey of Current Business; and BEA news releases are available without charge on BEA’s Web site at www.bea.gov. By visiting the site, you can also subscribe to receive free e-mail summaries of BEA releases and announcements.