Dollar's share in global central bank reserves declines, IMF data shows

By Anchalee Worrachate

The dollar’s share in global central-bank reserves dropped in the three months to the end of September, while holdings of the Japanese yen rose, International Monetary Fund data showed Friday. 
 

The greenback accounted for 59.2% of globally allocated foreign-exchange reserves in the third quarter, down from a revised 59.4% in the previous three months, according to IMF’s Currency Composition of Official Foreign Exchange Reserves (COFER) data. That’s the lowest since the fourth quarter of last year.

The euro’s share in reserves also fell slightly to 19.6% from 19.7%, while the participation of the Japanese yen rose to 5.5% from 5.3%. 

The shares of the Chinese yuan, the British pound, the Australian and Canadian dollars and the Swiss franc were little changed. A group of “other currencies” grew to 3.9% of reserves from 3.6% in the previous quarter.

While the dollar has been the reserve currency of choice for most of the world’s central banks due to its depth and stability in global markets, it has been gradually losing dominance since the start of the millennium, when its share was above 70%. 

The dollar’s supremacy has helped the US keep a lid on funding costs and run budget deficits, as trading partners put their dollars in US government bonds. It also supports American companies because the widespread use of dollars in global trade, such as for oil and commodities, often makes it cheaper for US multinationals to borrow.