What Currencies Are Foreign Exchange Reserves Held In?

WhatCurrencies Are ForeignExchange Reserves HeldIn?

Following up on the dollar’sstatus as aninternationalcurrency (andhowthreatsofdefault are nothelpful), here is what we know about the dollar’s role as a reserve currency.

Figure 1: Share of foreign exchange reserves held in USD (blue), EUR (black) and USD plus 60% of unallocated (red), and IMF estimated share in USD (green +). Source: IMFCOFER for 1999Q1-2013Q2 and IMF (estimates, 1965-2003).

In other words, we really don’t know how much of reserves are held in USD, although we can guess (60% seems a popular guess for the share of unallocated reserves in USD). It appears that USD shares are stabilizing after eight years of decline 2001-2009.

Figure 2 depicts the levels of reserves. Note the increasing portion in green, which is the unallocated share.

Figure 2: Foreign exchange reserves, in millions of dollars. Source: IMFCOFER.

It’s interesting to note the deceleration in overall reserve accumulation. More on that in a (near) future post.

For more on international currencies, see Frankel, as well as [1] [2].

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