| BERLIN, March 29
BERLIN, March 29 The dollar's share of central
bank reserves may fall by as much as 10-15 percentage points in
coming years without threatening its role as the world's main
reserve currency, a senior official from the Bank of
International Settlements said on Saturday.
Peter Zoellner, head of the banking department at the
central banks' central bank, also told one of the year's biggest
gatherings of foreign exchange dealers that the role of China's
renminbi would continue to grow.
He said there were signs that moves by Beijing to weaken the
yuan and end a decade of constant appreciation were
pushing some interests towards its tightly controlled onshore
market and that this might develop further in coming months.
He expected trading and central bank reserves held in the
yuan to continue to expand "at a sustained pace" but saw no
prospect that the Chinese currency could replace the dollar as
the reserve of choice over the next couple of decades.
"It could happen that the percentage will go slightly down
with the reserve currency from between 65 and 70 maybe to
between 50 and 60 percent," he told the ACI Financial Markets
Association congress in Berlin.
"But the relative dominance of the United States dollar I do
not believe that this will change for the next 10, 20 years."
Shifts in currency allocations by central banks, many of
whom decline to publish breakdowns of how much they hold in
reserves in a particular currency, are closely-watched by
foreign exchange markets.
BIS is the biggest repository for data on volumes, movements
and trade in currencies worldwide. Its triennial survey last
year showed volumes of trading had risen to an average of $5.3
trillion a day.
Zoellner said the expansion of yuan offshore trading was one
factor behind that rise and said he expected China's recent
moves to prompt further change in how its currency regime,
tightly controlled until now, operates.
"Most of the transactions over the last few years have been
done in the offshore markets... but there is more and more
activity in the domestic market in renminbi, quotas have been
increased and so on," he said.
The moves by China, mainly carried out by shifting its
onshore reference rate for the yuan against the dollar steadily
weaker, has driven a surge in yuan trading offshore and an
almost 3 percent fall in the value of the yuan against the
dollar, putting an end to one of the currency world's few sure
bets for steady appreciation.
"The Chinese authorities are doing something to break that
expectation of low volatility and one way direction. This
encouraged some of the speculative (investors) to do their short
term trades in China," Zoellner said.
"We will see how this works out, it has to be observed for
the next couple of months."
(Editing by Elaine Hardcastle)