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U.S. dollar share of reserves up in 1st qtr amid virus…

By Gertrude Chavez-Dreyfuss

NEW YORK, June 30 – The U.S. dollar’s share of currency reserves reported to the International Monetary Fund rose to 61.9% in the first quarter from the year-ago period, data released on Tuesday showed, as central bankers amassed the greenback in the wake of the coronavirus pandemic.

The dollar’s share remains the largest among all currencies. In the fourth quarter of 2019, the dollar’s share was 60.8%.

IMF data also showed global reserves slipped to 11.731 trillion from $11.824 trillion in the fourth quarter.

Reserves held in U.S. dollars totaled $6.794 trillion, or roughly 61.9% of allocated reserves in the first three months of the year. In the fourth quarter, dollar reserves were at $6.744 trillion, or a 60.8% share.

“While the dollar share of reserves has been trending lower over the last few years, that reversed somewhat in Q1 amid the COVID-19 shock,” said Goldman Sachs in a research note.

“While FX valuation adjustments are especially uncertain given the elevated market volatility, it’s likely that the headline increase was flattered by the dollar’s appreciation as well as its safe-haven status,” the bank added.

In the first quarter, the dollar index rose 2.6%.

Global reserves are assets of central banks held in different currencies, primarily used to support their liabilities. Central banks sometimes use reserves to help support their respective currencies.

The euro’s share of reserves was steady at 20% in the first quarter, from 20.5% in the previous three months.

The Chinese yuan’s share was also little changed at 1.9% of total allocated reserves.

The yen’s share of currency reserves was likewise stable at 5.6% in the first quarter, largely unchanged from the fourth quarter. (Reporting by Gertrude Chavez-Dreyfuss Editing by Chris Reese and Richard Chang)

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