The share of US dollars in global reserves slips in Q3 -IMF data

NEW YORK (Reuters) – The share of US dollars in foreign exchange reserves reported to the International Monetary Fund fell to 60.4% in the third quarter, from 61.2% in the second, IMF data showed on Thursday.

FILE PHOTOS: Banknotes in US dollars can be seen in this illustration of pictures on November 7, 2016. REUTERS / Dado Ruvić / Illustration / File Photo

However, the dollar is still the largest currency held by global central banks.

A year earlier, the dollar accounted for 61.5% of total reserves. Its share fell two consecutive quarters.

Global reserves are central bank assets held in various currencies and used primarily to support their liabilities. Central banks sometimes use reserves to help support their currencies.

IMF data also show that global reserves rose to a record $ 12.254 trillion in the third quarter, from $ 12.012 trillion in the second quarter.

Reserves in US dollars amounted to 6.937 trillion dollars, or 60.4% of allocated reserves in the third quarter. In the second quarter, dollar reserves amounted to $ 6.899 trillion, with a share of 61.2%.

Some analysts question whether the dollar could give up dominance as a reserve currency given the declining geopolitical power of the United States, the huge debt burden, and the emergence of alternative currencies.

“It’s true that the dollar will one day lose its status, as was the case with every global reserve currency before it, but the chances of that happening in our lives are extremely slim,” said David Rosenberg, chief economist and strategist at Rosenberg Research. , in his latest research note.

“The depth of dollar dominance is enormous and shows no immediate signs of drying up, even after COVID-19,” he added.

So far this year, the dollar has fallen 6.4%, its worst annual performance since 2017.

Rosenberg believes the dollar is currently in a cyclical bear market, not in a fit of collapse.

The share of the euro in global reserves was stable at 20.5% in the third quarter, compared with 20.1% in the second, according to IMF data. At its peak in 2009, the euro’s share of global reserves was 28 percent.

Report by Gertrude Chavez-Dreyfuss; Edited by Dan Grebler