June 30, 2015 / 3:05 PM / in 2 years

UPDATE 1-Global foreign exchange reserves drop in Q1 2015 - IMF

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By Anirban Nag

LONDON, June 30 (Reuters) - Global foreign exchange reserves fell in the first quarter of 2015, extending a trend that started in third quarter of last year, and the euro's share hit a 13-year low as Asian central banks stepped up sales.

Data from the International Monetary Fund showed global foreign exchange reserves fell to $11.433 trillion in the first quarter of 2015, from $11.589 trillion in the fourth quarter of 2014. The total amount of allocated foreign exchange holdings shrank to $6.062 trillion from $6.086 trillion in the prior quarter.

The value of euros held in allocated or known global foreign exchange reserves fell to $1.256 trillion from $1.343 trillion.

The IMF said the share of euros dropped to 20.7 percent from a 22.2 percent share in the previous quarter, its lowest in more than a decade, and a far cry from its peak in 2009, when the euro's share of reserves was at 28 percent.

Global central banks held $3.88 trillion worth of reserves in U.S. dollars, up from $3.83 trillion in the fourth quarter, with the greenback's share of allocated reserves rising to 64.12 percent from 62.9 percent.

Global reserves are assets of central banks held in different currencies, primarily to back their liabilities. Central banks sometimes buy and sell currencies from official international reserves to influence exchange rates.

The drop in the euro's share comes at a time when the European Central Bank unleashed a one-trillion euro asset purchase programme and cut interest rates to negative. The euro hit a 12-year low of $1.0457 on March 16, and shed over 11 percent in the first quarter of 2015.

Expectations that the Federal Reserve is likely to tighten monetary policy in coming months gave a boost to the dollar. The dollar hit a 12-year high against a basket of currencies in mid-March.

The Swiss National Bank, which has been a big buyer of euros, shocked markets by removing a cap on the franc against the euro on Jan. 15. That prompted speculation that one of the biggest central bank buyers of euros was likely to trim its exposure.

"Asian central banks have been rebalancing their holdings out of the euro," said Geoff Yu, currency strategist at UBS. "And while the SNB was a marginal buyer, the prospects of negative rates are not very appealing for these investors." (Reporting by Anirban Nag; Editing by Ruth Pitchford)

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