Reserve management: No cause to fear central banks

“Long-term data show that reserve managers historically have refrained from shifting their reserves abruptly” Mansoor Mohi-Uddin, UBS

The release by the IMF of the composition of foreign exchange reserves (Cofer) data for the third quarter of 2007 provides clues as to whether or not the world’s central banks are diversifying their dollar holdings. But a lot of care does need to be taken in analysing what the data actually imply. Derek Halpenny, senior currency economist at Bank of Tokyo-Mitsubishi, says that there is some suggestion that the euro’s failure to break above 1.50