US Dollar share of reserves up in Q1, 2020 amid pandemic-led stagnation: IMF



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US Dollar share of reserves up in Q1, 2020 amid pandemic-led stagnation: IMF

On Tuesday, data released from the International Monetary Fund had revealed that the American Dollar’s share of currency reserve reported to the IMF soared to 61.9 per cent over the first quarter of the year compared to the same time a year earlier, as a number of Central Bank, mostly from the emerging market economies had stockpiled the greenback due to the market uncertainties stemmed off the pandemic outbreak.

In point of fact, according to the IMF report on foreign currency market shares, the American currency held its No. 1 position among all currencies, while according to the IMF data, the shares of US Dollar in currency reserves rose to 61.9 per cent over the Q1, 2020, compared to a market share of 60.8 per cent in the fourth quarter of 2019.

Global FX reserves slip amid pandemic

Concomitantly, IMF data released late on Tuesday had also unveiled that the global foreign currency reserves fell during the first quarter of the year to $11.731 trillion from a figure of $11.824 trillion recorded in the fourth quarter of 2019, while the FX reserves held in American Dollars were totalled at $6.794 trillion.

Besides, the bloc’s common currency’s share as FX reserves had been little changed at 20 per cent in the first quarter of the year and the share of Chinese Yuan had also been unchanged at 1.9 per cent. Meanwhile, adding that the pandemic had revived the US Dollar’s safe-haven status, Goldman Sachs wrote in a client note followed by the release of IMF data, “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.

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.

” Over the first quarter of the year, the US Dollar index (DXY) measured against a basket of six major currencies were up by 2.6 per cent.