By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) – The U.S. dollar’s share of currency reserves reported to the International Monetary Fund was steady at 59.2% in the second quarter, compared with 59.5% in the first three months of the year, IMF data showed on Thursday.
The greenback remains the largest-held currency reserve by global central banks.
Global reserves, which are reported in U.S. dollars, are assets of central banks held in different currencies used primarily to support their liabilities. Central banks sometimes use reserves to help support their respective currencies.
“The reserve currency (dollar) is arguably the only defensive hedge left across all asset classes, as neither bonds nor the yen nor gold are particularly attractive in a world of rising yields,” Marios Hadjikyriacos, senior investment analyst at online FX broker XM, wrote in a research note.
The dollar index fell nearly 1% in the second quarter after gains of 3.6% in the first. In the third quarter, the dollar is on track to post a 2.1% rise.
The greenback has been supported in the last two weeks by the backup in U.S. Treasury debt in anticipation of tighter U.S. monetary policy after the Fed announced last week that it may start tapering stimulus as soon as November and flagged interest rate increases may follow sooner than expected.
The euro’s share of FX reserves, meanwhile, was little changed at 20.5% in the second quarter, from 20.6% in the previous three months. In 2009, the euro hit its highest share at 28%.
The Chinese yuan’s share increased to 2.6% in the second quarter, from 2.4% in the first. China’s share gained for six consecutive quarters, with yuan reserves rising 7.2% to $311 billion in the second quarter. The IMF started tracking the yuan’s share in 2017.
IMF data also showed global reserves rose to a record $12.817 trillion in the second quarter, from $12.584 trillion in the first.
Data also showed allocated reserves held in U.S. dollars rose 1.3% to $7.1 trillion, compared with $6.984 trillion in the first.
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Chizu Nomiyama and Jonathan Oatis)
