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Share of U.S. dollar reserve holdings remains steady

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
September 2005
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Total international reserves, including gold, increased by 15 percent during 2004, reaching SDR 2.7 trillion ($4 trillion) at year-end, according to the newly released IMF 2005 Annual Report (available on the IMF’s website, www.imf.org). Foreign exchange reserves—the largest component of official reserve holdings— grew by 18 percent, to SDR 2.4 trillion ($3.6 trillion). IMF-related assets, which make up the rest of nongold reserves, declined by 12 percent to SDR 76 billion ($113 billion), reflecting the recent decline in outstanding credit to member countries. And the market value of gold held by monetary authorities declined by 1 percent to SDR 254 billion ($377 billion) in 2004.

The report notes that the currency composition of foreign exchange reserves has changed gradually over the past decade (see table), with the share of U.S. dollar holdings rising from 60 percent in 1995 to 71 percent in 1999, and remaining broadly stable in 2000 and 2001. In 2002, the share of U.S. dollar holdings sharply declined to 67 percent, driven by the fall in value of the U.S. dollar and a reduced share of U.S. dollar assets in net purchases. The dollar share declined slightly further in 2003 before stabilizing in 2004. While official reserves held in U.S. dollars picked up strongly over these two years—accounting for more than 80 percent of the increase in official reserve holdings—this was offset by the depreciation of the U.S. dollar vis-à-vis other major currencies.

The euro, which replaced 11 European currencies on January 1,1999, accounted for 24-25 percent of total foreign exchange reserves in 2002-04, higher than in 1999-2001. Over the past decade, the share of the Japanese yen declined from 7 percent to 4 percent; the share of the pound sterling rose slightly from around 2 percent to around 3 percent; and that of the Swiss franc remained below 1 percent.

The data in this year’s Annual Report reflect an improved compilation methodology and other data improvements. The aggregate currency shares are calculated based on data reported by the authorities, while unallocated reserves are reported under memorandum items (see Annual Report for details).

Given a heightened interest in the currency composition of reserves, the IMF plans to disseminate data on a quarterly basis beginning in December 2005.

Currency composition of reserves
1995199920002001200220032004
(percent, end of year)1
U.S. dollar59.971.070.570.766.565.865.9
Japanese yen6.86.46.35.24.54.13.9
Pound sterling2.12.92.82.72.92.63.3
Swiss franc0.30.20.30.30.40.20.2
Euro217.918.819.824.225.324.9
Deutsche mark15.8
French franc2.4
Netherlands guilder0.3
Other currencies4.81.61.41.21.41.91.8
Memorandum items
Unallocated reserves3
All countries25.622.923.626.028.329.832.6
Industrial countries1.01.10.30.30.30.20.3
Developing countries47.637.839.442.145.047.250.2
Note: Components may not sum to total because of rounding. Country coverage changes marginally every year, but the changes were larger than usual in 1996 (broader coverage) and in 2000 (narrower coverage). The data for 2004 are preliminary.

The currency shares are calculated for the reserves of member countries that report the currency composition of their foreign exchange reserves. The data include minimal estimation undertaken mainly for late reporters. Reserves for which currency composition is not reported are shown under “Unallocated reserves.”

Not comparable with the combined share of euro legacy currencies in previous years because it excludes the euros received by euro area members when their previous holdings of other euro area members’ legacy currencies were converted into euros on January 1,1999.

Foreign exchange reserves whose currency composition information is not submitted to the IMF, in percent of total official holdings of reserves. Data: IMF, International Financial Statistics.

Note: Components may not sum to total because of rounding. Country coverage changes marginally every year, but the changes were larger than usual in 1996 (broader coverage) and in 2000 (narrower coverage). The data for 2004 are preliminary.

The currency shares are calculated for the reserves of member countries that report the currency composition of their foreign exchange reserves. The data include minimal estimation undertaken mainly for late reporters. Reserves for which currency composition is not reported are shown under “Unallocated reserves.”

Not comparable with the combined share of euro legacy currencies in previous years because it excludes the euros received by euro area members when their previous holdings of other euro area members’ legacy currencies were converted into euros on January 1,1999.

Foreign exchange reserves whose currency composition information is not submitted to the IMF, in percent of total official holdings of reserves. Data: IMF, International Financial Statistics.

Laura Wallace

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