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Man, the dollar just can’t catch a break!
Just a few days after the story/rumor that a consortium of nations wanted to remove the dollar from the oil trade, we hear this: Global central banks are ditching the dollar at a historic rate.
Central banks increased foreign exchange holdings by $413 billion in the second quarter (the most since 2003), say Bloomberg data. But of those new holdings, only 37% were greenbacks. Over the last 10 years, the average dollar share of new reserves has been 63%. Has the credit crisis christened a new era for FX reserves?
“Central banks are doing more than talking about reducing the concentration of USD in their reserve portfolios,” said Barclay’s Steven Englander, who wrangled this data. “They are actually acting on their statements.”
Interestingly, global central banks chose the euro and yen to replace the dollar in the second quarter. The two monies accounted for all but a smidge of the remaining 63% share of new FX reserves. The euro garnered 50% of new reserves, the first time it’s ever achieved such investment.
We could think of more attractive monies… perhaps ones that aren’t part of a bitterly divided union of nations or a country that’s been in recession for most of this decade. But hey, with performances versus the dollar like this over the last six months, can you blame them?
…read more HERE.