ORLANDO, Florida, June 17 (Reuters) - As debate rages around 'de-dollarization' and the world's appetite for dollar-denominated assets, one major cohort of overseas investors appears to be quietly backing away from U.S. securities: central banks. That's the conclusion to be drawn from the New York Fed's latest 'custody' data, which shows a steady decline in the value of Treasuries and other U.S. securities held on behalf of foreign central banks.

There are many ways to gauge foreign demand for U.S. assets, and they often send conflicting signals. Moreover, the broadest and most accurate measures, like U.S. Treasury International Capital (TIC) or the International Monetary Fund's 'Cofer' FX reserves data, come with a long lag of two months or more. The New York Fed custody holdings figures are weekly, which is as 'real time' as it gets in the world of central bank flows.

These figures last week showed that the value of U.S. Treasuries held at the New York Fed on behalf of foreign central banks fell to $2.88 trillion. That's the lowest since January, and the $17.1 billion decline was also the biggest fall since January. Including mortgage-backed bonds, agency debt and other securities, the total value of foreign central banks' U.S. custody holdings at the New York Fed last week dropped to $3.22 trillion, the lowest since 2017. That figure has fallen by around $90 billion since March, just before President Trump's 'Liberation Day' tariff debacle on April 2, with more than half of the decline coming from Treasuries.