Saturday, April 14, 2018

IMF - US Dollar Share of Global Reserves Hits 4 Year Low

In its most recently quarterly report on global reserves, the IMF reports that the share of US dollar reserves globally hit a four year low. The MalaymailOnline carried the report and some excerpts are below. It should be noted that while dollar reserves did drop a bit a new four year low, they are still by far the majority of global reserves.


"NEW YORK, March 31 — The US dollar’s share of currency reserves reported to the International Monetary Fund declined in the final quarter of 2017 to a four-year low, as other currencies’ shares of reserves grew, data released yesterday showed.

The share of dollar reserves has declined for four straight quarters as the greenback weakened in 2017 due to faster growth outside the United States and bets that other major central banks would consider reducing stimulus. Still the dollar has remained the biggest reserve currency by far.

Global reserves are assets of central banks held in different currencies, mainly used to support their liabilities. Central banks sometimes have used reserves to help support their respective currencies.

“Reserve managers in Q4 liked (yen) and ‘other currencies,’” Steven Englander, head of research and strategy with Rafiki Capital Management, wrote in a research note. “The limited (US dollar) buying is not surprising. Reserve managers buy (US dollar) when they have to — they rarely want to buy.”


Added news note: Quartz ( reported in January 2018 that there is a small move away from the US dollar towards the Chinese Yuan going on in Europe. However, it again should be noted that the changes so far are very small and taking place at a very slow pace with the US dollar still over 60% of global reserves (the Euro is the next closest at around 20% while the Yuan is still only just over 1%).

Additional news notes: IMF Director Christine Lagarde issued a warning on global debt in this interview with the South China Morning Post. The Director noted that 40% of new global debt since 2007 has come from China and said the debt to GDP ratio for both Hong Kong and China raised red flags.She also pointed out that global debt has now soared to 220% of global output. Despite the warnings, she finished the interview by saying she is "desparately optimistic, always."

In this article in the IndiaTimes, she is quoted as warning that the so called "belt and road" initiative coming out of China may add to debt problems for some of the nations involved in that project. The article says that some of her comments may "ruffle feathers in Beijing."

I always find it interesting to read articles from different parts of the world because you can see how different talking points are emphasized depending on who is running the article.

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