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MACRO ANALYSIS: USD Share Of FX Reserves Declining But Still Substantial [1/3]

MACRO ANALYSIS
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  • Latest IMF COFER data for Q2 showed a dip in the US dollar’s share of total global FX reserves from 54.7% to 54.1% to nudge below late 2023 levels for its lowest since mid-2017.
  • It’s down from a high of 58% seen shortly before the pandemic but it starts to get more misleading looking further back when voluntary reporting to the IMFs COFER data was much weaker. That meant the share of “unallocated” reserves (i.e. those that countries didn’t want to report as being denominated in a specific currency) was much higher, although it’s still non-trivial today at 7% of total FX reserves.
  • Alternatively, the USD’s share of “allocated” reserves (or those reported in sufficient detail) fell from 58.9% to 58.2% in Q2 to broadly continue its steady trend decline to what is now its lowest share since 1995. It still dwarves the next largest currency though, with the Euro at 20% of allocated reserves.
  • Sticking with shares of allocated rather than total reserves, the other ‘big four’ currencies saw mostly offsetting changes in Q2, with EUR accounting for 19.8% after 19.6%, JPY 5.6% after 5.7% and GBP unchanged at 4.9%.  
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  • Latest IMF COFER data for Q2 showed a dip in the US dollar’s share of total global FX reserves from 54.7% to 54.1% to nudge below late 2023 levels for its lowest since mid-2017.
  • It’s down from a high of 58% seen shortly before the pandemic but it starts to get more misleading looking further back when voluntary reporting to the IMFs COFER data was much weaker. That meant the share of “unallocated” reserves (i.e. those that countries didn’t want to report as being denominated in a specific currency) was much higher, although it’s still non-trivial today at 7% of total FX reserves.
  • Alternatively, the USD’s share of “allocated” reserves (or those reported in sufficient detail) fell from 58.9% to 58.2% in Q2 to broadly continue its steady trend decline to what is now its lowest share since 1995. It still dwarves the next largest currency though, with the Euro at 20% of allocated reserves.
  • Sticking with shares of allocated rather than total reserves, the other ‘big four’ currencies saw mostly offsetting changes in Q2, with EUR accounting for 19.8% after 19.6%, JPY 5.6% after 5.7% and GBP unchanged at 4.9%.