The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Foreign Exchange

Reserve management: No cause to fear central banks

Reserve managers are unlikely to suddenly adjust foreign currency holdings and latest IMF data suggest they will not chase the euro higher.

Mansoor Mohi-Uddin, UBS

"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 against the dollar is because the central banks’ appetite for the single currency has waned. However, from his analysis of the IMF’s Cofer, Halpenny feels that this is not necessarily the case. "The focus of the foreign exchange market on reserve diversification has diminished somewhat recently but the data for the third quarter [of 2007] revealed that the rate of growth in foreign exchange reserve accumulation has been steadily increasing," he says.

Appetite

He adds: "The record rate of annual growth in global foreign exchange reserves is 31.8%,

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree