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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 - Click to enlarge |
