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Central Banks in ‘Emergency Selling’ of Euro
The percentage of global reserve holdings of the euro fell to the least in more than a decade in the third quarter, according to International Monetary Fund figures.
The 18-nation shared currency’s portion of global holdings fell to 22.6 percent, according to the data, the least since 2002. The $1.4 trillion in euros held by central banks worldwide were down from $1.5 trillion in the second quarter. The U.S. dollar, with $3.9 trillion in holdings, up from $3.8 trillion, represented the largest percentage of the $6.2 trillion total of known reserves at 62.3 percent, the most since December 2011.
“This is really big news” that reflects “emergency selling” of the euro, Sebastien Galy, a senior currency strategist at Societe Generale SA in New York, said by phone. “The loss of status as a foreign reserve in the short term is very good for risky assets in the euro zone, because it means euro-dollar is actually going to drop more. And that’s very good, of course, for the euro zone in terms of the inflation expectations and equities.”
The euro has dropped 12 percent to $1.2102 per dollar this year as the European Central Bank furthers its monetary stimulus efforts to boost growth. The Federal Reserve in contrast is heading toward raising interest rates next year for the first time since 2006.
The yen was the third most held currency in the third quarter, at 4 percent, followed by the pound, at 3.8 percent.
The holdings of the Canadian and Australian dollars both dropped, to 1.92 percent and 1.89 percent. The two currencies were broken out from the IMF’s “other currencies” category starting in 2012.
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The percentage of global reserve holdings of the euro fell to the least in more than a decade in the third quarter, according to International Monetary Fund figures.
The 18-nation shared currency’s portion of global holdings fell to 22.6 percent, according to the data, the least since 2002. The $1.4 trillion in euros held by central banks worldwide were down from $1.5 trillion in the second quarter. The U.S. dollar, with $3.9 trillion in holdings, up from $3.8 trillion, represented the largest percentage of the $6.2 trillion total of known reserves at 62.3 percent, the most since December 2011.
“This is really big news” that reflects “emergency selling” of the euro, Sebastien Galy, a senior currency strategist at Societe Generale SA in New York, said by phone. “The loss of status as a foreign reserve in the short term is very good for risky assets in the euro zone, because it means euro-dollar is actually going to drop more. And that’s very good, of course, for the euro zone in terms of the inflation expectations and equities.”
The euro has dropped 12 percent to $1.2102 per dollar this year as the European Central Bank furthers its monetary stimulus efforts to boost growth. The Federal Reserve in contrast is heading toward raising interest rates next year for the first time since 2006.
The yen was the third most held currency in the third quarter, at 4 percent, followed by the pound, at 3.8 percent.
The holdings of the Canadian and Australian dollars both dropped, to 1.92 percent and 1.89 percent. The two currencies were broken out from the IMF’s “other currencies” category starting in 2012.
[You must be registered and logged in to see this link.]
