Central banks around the globe are stepping up purchases of treasuries supporting the US government's debt habit and helping to hold down interest rates at the same time. Morgan Stanley strategist Byron Wien believes the accumulation of US government debt is holding down long bond yields as much as a full percentage point. He said: 'US rates would be 50 to 100 basis points higher if it were not for all this foreign buying of US Treasuries.' Japan has purchased about US$16 billion worth of US Treasuries in the January-June period this year - nearly double their purchasing levels last year. Recently released balance-of-payment data show that Japanese investors bought $6.2 billion dollars worth in August, from $2.4 billion in July. China's central bank bought about $8.8 billion worth of US Treasuries in the first six months of the year, up from $700 million in all of 1995. The US dependence on foreign capital is well established but the investors may not be keep pouring money in forever, Mr Wien says. Now, governments in Japan and Europe want to keep the dollar strong to support their own exports. Once their economies improve, they may rethink their policies and slow down their buying of US Treasuries, he says.