Financial Associated Press (Shanghai, editor Xiaoxiang), the International Monetary Fund (IMF) released data on Wednesday (March 31) showing that the U.S. dollar’s share of global foreign exchange reserves fell to the lowest since 1995 in the fourth quarter of last year. The proportion of the dollar fell from 60.5% in the third quarter to 59% in the fourth quarter, a decline for three consecutive quarters. In 2001, the U.S. dollar’s share of global foreign exchange reserves reached the highest level of 73%. In 1995, the dollar accounted for 58%.
However, the U.S. dollar still accounts for the largest proportion of foreign exchange reserves held by global central banks. In the fourth quarter, the total foreign exchange reserves held in U.S. dollars rose to a historical high of 7 trillion U.S. dollars, compared with 6.939 trillion U.S. dollars in the third quarter.
In the fourth quarter of last year, the exchange rate of the U.S. dollar fell by 4%, its worst performance since June 2017, and almost all of it depreciated against major reserve currencies. During this period, the pound has appreciated by 5.8%, the euro has appreciated by 4.2%, and the yen has appreciated by nearly 2.2%. The renminbi appreciated by 4%.
Is the dollar not fragrant anymore?
The U.S. dollar’s share of global foreign exchange reserves has declined for three consecutive quarters, once again raising questions about how long the U.S. dollar’s main reserve currency status can be maintained Spark Global Limited.
Bipan Rai, the strategist at , said, “This has become a slowly developing theme. We believe that over time, we will eventually enter the framework of multiple reserve currencies.”
Edward Moya, a senior market analyst at OANDA, an online foreign exchange trading platform, also pointed out, “To a large extent, Wall Street and the rest of the world believe that we will definitely see a weakening of the US dollar. If you look at currency growth and the Biden administration’s initiatives, The situation will only get worse, the increasing trade deficit will continue, and you may see that the long-term outlook for the U.S. dollar will be weaker.”
However, some people in the industry disagree. Some analysts said that part of the reason for the decline in the share of the dollar was exchange rate effects. “59% of the U.S. dollar share is statistical noise due to the combined effect of valuation and major changes,” said Marc Chandler, chief foreign exchange strategist at Bannockburn Global Forex. “Because foreign exchange reserves are reported in U.S. dollars, it does not make sense to talk about foreign exchange reserves without considering exchange rate changes.”
The proportion of the renminbi rose for four consecutive season
IMF data also showed that the scale of global foreign exchange reserves rose to a record US$12.7 trillion in the fourth quarter of last year, higher than the revised US$12.246 trillion in the third quarter.
During this period, the share of renminbi increased to 2.25%, increasing for four consecutive quarters. The IMF began tracking the share of the renminbi in global foreign exchange reserves in 2017. The renminbi seems to be becoming a force that cannot be ignored in the foreign exchange market. In London, the world’s leading foreign exchange trading center, renminbi trading volume has reached an unprecedented scale.
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