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Proportion of the dollar in foreign exchange reserves falls 59% in the fourth quarter of 2020

Por Gertrude Chavez-Dreyfuss

NEW YORK, Mar 31 (Reuters) – The U.S. dollar’s share of foreign exchange reserves reported by the International Monetary Fund fell to 59% in the fourth quarter, from 60.5% in the previous three-month period, officials said on Wednesday. Fund data.

This is the largest decline in the share of the US currency in 25 years.

However, the dollar still holds most of the foreign exchange reserves of the major central banks. It scored a peak ratio of nearly 73% in 2001, according to the data.

“For the most part, Wall Street and the rest of the world are convinced that we will surely see a weaker dollar. If you look at the growth of money, the initiatives of the (President Joe) Biden administration, this will only get worse (for the dollar), “said Edward Moya, senior market analyst at online currency trading platform OANDA.

“The growing trade deficit is going to continue and the long-term prospects for the dollar will probably be seen to be much weaker,” he said.

Global reserves are assets of central banks held in different currencies and are used primarily to back their liabilities. Central banks sometimes use reserves to help back their respective currencies.

The euro’s share, meanwhile, rose to 21.2% in the fourth quarter of last year, compared with a share of 20.5% in the third. The share of the EU single currency in the fourth quarter was the highest since 2014.

(Reporting by Gertrude Chavez-Dreyfuss. Edited in Spanish by Marion Giraldo)

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