Forex Blog: Currency Trading News & Analysis.

January 2nd 2008

Dollar Declines in Forex Reserves

What analysts have been warning of for years has finally come to pass: the USD officially occupies a smaller portion of global foreign exchange reserves.  According to a recent IMF reports, the fraction of reserves denominated in Dollars has fallen from 66.5% to 63.8% over  the last year, with much of the difference offset by a proportional rise in the preponderance of the Euro.  Analysts first began sounding alarm bells as early as 2003, when the Dollar fell nearly 15% against the Euro.  However, it wasn’t until 2006, when China began to accumulate reserves at an ever-increasing rate as its trade surplus exploded while at the same time the USD was tanking, that commentators began paying attention. 2007 brought several anecdotal reports that foreign Central Banks were both passively and actively diversifying their reserves.  Now, it looks as though these were not isolated incidents, but instead part of a broader trend. AFP reports:

In recent months, several emerging-market countries, whose foreign currency reserves have ballooned as a result of such factors as high commodity prices and strong exports, have signaled their intention to further diversify their foreign exchange reserves to offset the US currency’s depreciation.

Read More: IMF says dollar losing ground in global forex reserves

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Posted by Adam Kritzer | in Central Banks, US Dollar | No Comments »

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