The Share of the Dollar in Global Reserves Falls to Lowest Levels in 4 Years

The share of the US dollar in global foreign exchange reserves fell in the first quarter of 2018 to new lows not seen in the last four years, while the share of the euro, as well as the Chinese and British currencies, increased, reported the International Monetary Fund (IMF).

The dollar’s share in global reserves has been declining for five consecutive quarters, as the dollar weakened in the first three months of 2018 due to expectations that growth in economies outside the US would accelerate, which could prompt major central banks around the world to reduce monetary stimulus. Despite this, the dollar remains the most significant foreign exchange reserve.

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Global reserves are assets held by central banks in various currencies and primarily serve to support their liabilities. Central banks sometimes use these reserves to help maintain currency exchange rates.

Reserves in US dollars amounted to $6.449 trillion in the first quarter, with their share of total global reserves falling to 62.48 percent, down from 62.72 in the fourth quarter of last year.

Thus, the share of reserves in US dollars has dropped to its lowest level since the fourth quarter of 2013, when it was 61.24 percent, according to recently published IMF data.

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The share of the euro in global foreign exchange reserves reached 20.39 percent in the first quarter, up from 20.15 percent in the previous quarter. This is its highest level since the last quarter of 2014, but far below the 28 percent share of the euro in global reserves in 2009.

The share of the Chinese yuan in global foreign exchange reserves has been rising for three consecutive quarters, reaching 1.39 percent in the first quarter of this year.

The share of the British pound has simultaneously increased to 4.68 percent, marking its largest rise since the last quarter of 2015. On the other hand, the share of the Japanese yen in foreign exchange reserves slipped from 4.89 to 4.81 percent, the IMF report showed.