By Karin Strohecker and Dhara Ranasinghe
LONDON (Reuters) -The Chinese yuan and Australian dollar increased their share in global currency reserves in the second quarter, data from the International Monetary Fund shows, while the U.S. dollar and euro lost a little ground, adjusted for exchange rate swings.
The yuan and Aussie dollar gained 0.03 percentage points of market share quarter-on-quarter, though both make up just over 2% each of the near $13 trillion pile of reserves, according to the data compiled and analysed by the IMF from reserve managers across 149 economies.
The dollar lost 0.12 percentage points to make up 56.32% of global reserves at the end of the second quarter, when adjusted for currency fluctuations. The euro’s share stood at 21.13% of overall reserves.
The IMF published the adjusted data – which it had not done previously – to account for dramatic currency swings since the start of the year when Donald Trump’s return to the White House and his pivot in trade and economic policies rocked markets.
The dollar index, which measures its performance against currencies from the euro zone, Japan, Britain, Canada, Sweden, and Switzerland, fell more than 10% in the first half of the year, its biggest drop since 1973. The dollar weakened 8% in the second quarter alone.
“Currency movements explain 92% of the reduction of the dollar’s share during the three months through June,” the IMF said in a blog accompanying its data release. “Similar exchange rate effects can be seen in other currencies, including for the euro, the world’s No. 2 reserve currency.”
The total amount of foreign exchange reserves held by central banks – valued in U.S. dollars – stood at $12.945 trillion, compared with $12.540 trillion in the first quarter, the IMF calculations showed.
Swings in foreign exchange markets do not necessarily equate to reserve managers’ willingness to hold certain currencies.
But the market turmoil induced by Trump policies and attacks on the independence of the U.S. Federal Reserve have fuelled a debate on whether the dollar could be in danger of losing its dominant position in the global monetary system.
While some point to nascent signs of dedollarisation, there is broad agreement that any such shift would be very slow.
(Reporting by Karin Strohecker and Dhara Ranasinghe. Editing by Mark Potter)
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