tyb/s
De-Dollarization Accelerates: Central Banks Dump Dollar In Q4, Buy Yuan
The dollar’s share of global central-bank reserves slumped to the lowest level since 2013 while holdings of the Chinese yuan rose for the fifth quarter in the past six, IMF data showed Friday.
The U.S. currency accounted for 61.7% of global allocated foreign-exchange reserves in the fourth quarter, down from 61.9%* and the tenth decline in the past 12 quarters according to the IMF's Currency Composition of Official Foreign Exchange Reserves (COFER) for Q4 2018 report. The drop occurred despite a 1% jump in the value of the dollar in the fourth quarter. The euro, yen and yuan each gained as a share of allocated reserves. While modest at just 1.9%, reserve allocation to the Chinese Yuan has been increasing rapidly and is now almost double where it was two years ago.
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this is not a huge drop %-wise however the global FX market is the largest in the world. Small moves can wipe you out if positioned incorrectly
Cap 2 shows the main takeaways from the report: reserve managers actively decreased their allocation to USD—the share of USD reserves declined despite modest Dollar appreciation—while they actively added to EUR and CNY reserves. According to Goldman calculations, the drop in Q4 USD reserves was equivalent to just over $50 billion in dollar reserves sold.
(of course this has nothing to do with the trillions of yuan printed up and thrown at the mkts starting in early january-see cap #3. Also no coincidence that our index's began the ascent portion of where they are now-it actually began on the second trading day of the year, the day AFTER Apple warned on it's upcoming qtry report. That the central banking system is actively de-leveraging from the US dollar is no surprise at this point. Witness the action that the New Zealand Central bank took just recently here:
Another Central Bank Turns Dovish
https://nz.finance.yahoo.com/news/another-central-bank-turns-dovish-090618984.html
(Over the long term the Chinese intervention is just the latest in an attempt to bolster the yuan's position over the USD)
More specifically, the reported USD share of allocated reserves declined by another 0.3% in Q4. Cumulatively, the USD share has fallen by 3.7% since the end of 2016 and by 1.0% in 2018 (despite supportive Dollar price action). Against this, reserve managers continued to add to their EUR reserves with the reported EUR share increasing by 0.2% this quarter, and by 1.6% on net since the end of 2016. Both in Q4 and 2018 as a whole, reserve managers more than offset a weaker Euro to keep the share of EUR reserves on a rising trend, despite a number of political and growth tensions and concerns.
Cap #4 shows the time-frame that each country who have had the world's reserve currency. They did not call it that long ago however that tag is relevant in speaking to the current status of the USD as that.
Cap #5 shows the steady downtrend of the USD with regards to it being the dominant player in transactions around the globe. It also shows how the European Central Bank has been trying to increase the use of it's currency as a replacement.
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https://www.zerohedge.com/news/2019-03-30/de-dollarization-accelerates-central-banks-dump-dollar-q4-buy-yuan
you have 26 posts like I give a shit what you say
The way the treasury has changed how it reports who does what and in what bucket it comes from it is not very easy to tell who does what any longer. That started habbening in about 2005 when the treasury changed alot of how it accounts for those purchases. The primary dealers are all required to do this however there is no stipulation as what currency they use to purchase.