Foreign bank deposits at the Federal Reserve have more than doubled to $715 billion from $350 billion since the end of 2010 amid Europe's debt turmoil, buttressing the dollar's status as the world's reserve currency.

Forty-seven non-U.S. banks held balances of more than $1 billion at the Federal Reserve Bank of New York at Sept. 30, up from 22 at the end of 2010, according to a survey of 80 financial institutions by ICAP PLC, the world's largest inter-dealer broker. The dollar has appreciated 7.2% since Standard & Poor's cut the nation's AAA credit rating on Aug. 5, the second-best performance after the yen among developed nation peers, according to Bloomberg Correlation-Weighted Currency Indexes.

A budget deficit of more than $1 trillion, a deadlock among congressional supercommittee members on spending cuts and 9% unemployment haven't deterred investors from seeking safety in the world's biggest economy. The euro has been undermined by the region's sovereign debt crisis, while the Swiss franc and yen have fallen as their governments buy billions of dollars to weaken them.

"There's not anything close to a substitute and part of it is the deepness of the market, the liquidity," Jack McIntyre, a fund manager who oversees $23 billion in debt at Brandywine Global Investment Management, a unit of Legg Mason Inc., said Nov. 15 in a telephone interview from Philadelphia. "There's a perception, right or wrong, that we're going to make good on all of our assets."

The Fed's record-low target interest rate for overnight loans among banks at between zero and 0.25% hasn't discouraged dollar buying as slowing global growth and turmoil in Europe spur central banks from Australia to Brazil to cut rates, reducing their appeal to investors seeking higher returns.

Foreign demand for U.S. assets rose the most in 10 months in September. Net buying of long-term equities, notes and bonds totaled $68.6 billion, the highest since November 2010, compared with net buying of $58 billion in August, the Treasury Department said Nov. 16.

The dollar is up 6.5% in the past three months, recovering to about level this year with its nine peers, which include the Swedish krona and the Swiss franc. It's trading about 4% below where it was in 1975, two years after President Nixon ended the currency's official ties to gold.

Demand for Treasury securities that mature in under a year has increased as financial institutions boost holdings of the highest-quality assets to meet new regulations set by the Bank for International Settlements in Basel, Switzerland. Bank holdings of Treasuries and government-related debt totaled a record $1.69 trillion at the end of October, up from less than $1.1 trillion in 2008.

"With the heightened emphasis on stronger liquidity positions for financial institutions around the world, we've seen an increase in the regulatory demand for liquid assets, but we're not necessarily seeing an increase in the supply of liquid assets," Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, N.J., a unit of ICAP, said in a Nov. 14 interview. "They're meeting that need by holding Fed balances."

Rates on three-month bills ended last week at zero, down from this year's high of 0.157% in February and 5% in mid-2007, just before credit markets froze as losses on subprime mortgages accelerated.

"People are hoarding cash because they see that there's some difficulty in the U.S. dollar funding market" as banks shed euro-denominated assets, Charles St-Arnaud, a foreign exchange strategist at Nomura Holdings Inc. in New York, said in a telephone interview Nov. 14.

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