Bloomberg News

Dollar Share of Currency Reserves Climbs, Euro at Three-Year Low

January 02, 2012

Dec. 30 (Bloomberg) -- The U.S. dollar’s share of global foreign-exchange reserves climbed in the third quarter to the highest since late 2010, while holdings of euros declined to a three-year low, International Monetary Fund data show.

The U.S. currency’s portion rose to 61.7 percent in the period ended Sept. 30, the highest since the last three months of 2010, from 60.3 percent in the prior quarter, according to figures from the Washington-based IMF quarterly data. The share of euros fell to 25.7 percent, the lowest since the period of July through September in 2008.

The 17-nation currency is headed for its first back-to-back annual decreases versus the dollar in a decade. Two years of summits have failed to contain a European debt crisis, making the U.S. dollar more attractive as a reserve currency.

“The dollar right now is the only game in town,” Boris Schlossberg, director of research at online currency trader GFT Forex in New York, said in a telephone interview. “The euro, which looked like an alternative, is under so much stress right now nobody in the market is considering it a viable reserve choice for the time being.”

The share of “other currencies,” which excludes reserve holdings of U.S. dollars, euros, British pounds, Japanese yen and Swiss francs, decreased to 4.8 percent from 4.9 percent in the previous quarter, IMF data showed.

The pound’s share fell to 3.9 percent from 4.1 percent, while the yen’s portion held at 3.8 percent, according to the IMF data. Swiss francs also held, at 0.l percent. The overall level of reserves climbed 0.9 percent to a record high of $10.18 trillion, the data showed.

The IMF calculated the dollar’s share based on data from central banks that report their currency allocations. Some countries, including China, the world’s largest reserve holder, don’t give currency breakdowns.

--Editors: Gail DeGeorge, James Tyson

To contact the reporters on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net; Allison Bennett in New York at abennett23@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net


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