Bloomberg News

Kazakh Central Bank Reduces Euro’s Share in Reserves to 25%

June 06, 2012

Kazakhstan cut the euro’s share in its reserves by 5 percentage points this year, joining other central banks in pulling money out of the currency amid a deepening debt crisis in Europe.

The common currency’s portion was decreased to 25 percent, from 30 percent last year, and “we are not moving further” to reduce euro-denominated holdings, central bank Chairman Grigori Marchenko told reporters today in the Kazakh commercial capital of Almaty. The bank added other currencies after dumping some of its investments in the euro, according to Marchenko.

Europe’s turmoil, which has tipped at least eight of the 17 euro-area countries into recession, is damping demand for euro assets as central banks expand into currencies from other economies. Russia and the Czech Republic cut the share of their reserves held in the euro last year, while Hungary’s central bank said it will diversify its stockpile, currently invested exclusively in euro-denominated securities, to include dollars, yen and British pounds. Azerbaijan’s State Oil Fund said last November it may add the Russian ruble and the Turkish lira to its holdings.

Kazakhstan’s National Oil Fund may replace some of its holdings in euros with Danish kroner, Marchenko said in April. The central bank may add the ruble, South Korea’s won and the Brazilian real to its reserves, he said Sept. 7.

Euro’s Share

The euro’s share of global reserves fell to 26.7 percent as of the end of last June from a peak of 27.9 percent in September 2009, a month before Greece’s new government sparked the debt crisis by revealing that its predecessor had understated the budget deficit, International Monetary Fund data on Sept. 30 showed.

Central banks and other wealth managers raised allocations to a group the IMF calls “other currencies,” which Citigroup Inc. says likely includes equal amounts of Australian and Canadian dollars and the Swedish krona, to 4.9 percent from 3 percent.

Kazakhstan’s gross international currency and gold reserves fell 2 percent to $34.3 billion in May from a month earlier as the euro lost value, according to the National Bank of Kazakhstan.

The National Oil Fund’s assets rose to $51.6 billion at the end of May, the central bank said today on its website. The fund is managed by the country’s central bank.

The regulator bought $600 million last month on the currency market to curb appreciation of the tenge, raising total purchases this year to more than $2 billion, Marchenko said today.

To contact the reporter on this story: Nariman Gizitdinov in Almaty at ngizitdinov@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net


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