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Central banks adding euros to their FX reserves

Central banks are looking beyond the dollar to grow their foreign exchange reserves for the first time in a decade. Rising trade tensions, and a recovering European economy bode well for the euro making a stronger case for central banks to diversify into the monetary union’s currency.

Approximately 64% of fx reserves are held in dollars, followed by euros at 20%, and the yen and pound sterling each commanding 4.5%. The euro’s share of global currency reserves fell from 28% back in 2009.

“A lot of countries around the world are turning to Europe for increased partnership in trade,’’ says Jens Nordvig, who was Wall Street’s top-ranked currency strategist 5 years in a row. “..The bottom line is this trade stance the U.S. has now is not helpful in making the dollar attractive for central banks that hold billions in reserves.”

Top Foreign Reserve Holders by Assets

Top Foreign Reserve Holders by Assets

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