March 31, 2015 / 3:25 PM / 3 years ago

UPDATE 1-U.S. dollar increases share of central bank FX reserves -IMF

(Adds details on reserves of other currencies, background, comment, byline)

By Daniel Bases

NEW YORK, March 31 (Reuters) - The U.S. dollar increased its share of allocated international reserves to 62.9 percent among global central banks in the fourth quarter, data from the International Monetary Fund showed on Tuesday.

The total amount of allocated foreign exchange holdings shrank by 1.6 percent to $6.085 trillion from the prior quarter. Overall foreign exchange holdings by the world’s central banks slipped 1.41 percent to $11.6 trillion.

Global central banks held $3.826 trillion worth of reserves in U.S. dollars, down from $3.857 trillion in the third quarter, when the greenback’s share was 62.4 percent.

“The dollar dropped because we likely saw some intervention during the quarter, but it is unlikely to represent a diversification move, which was what we were talking about three years ago,” said Steven Englander, global head of G10 FX strategy at CitiFX in New York.

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

Euro reserves, at $1.351 trillion, represented a 22.2 percent share, down from 22.6 percent in the third quarter. At its peak in 2009, the euro’s share of reserves was 28 percent.

The yen’s share was down slightly at 3.9 percent, with $241.2 billion held in reserves.

“Given how little the yen dropped, it looks like there is some ... buying of yen,” Englander said. “We estimated yen depreciation should have knocked the value of yen in reserves down about $20 billion, but it only went down about $3.4 billion.”

In the fourth quarter, the dollar rose 9.2 percent in value against the yen, part of a broad-based greenback rally.

Central banks held US$116.2 billion in Canadian dollars, down from US$119.5 in the third quarter.

Unallocated reserves, which are not known and believed to be mostly held by China, fell to $5.515 trillion from $5.582 trillion. That represented a slight increase to 47.5 percent of total foreign exchange holdings.

China’s central bank reported that its foreign exchange reserves totaled $3.84 trillion at the end of 2014.

Currency holdings of global central banks hit a record $12 trillion in the second quarter of 2014. At the beginning of the financial crisis in 2008, the dollar’s share of global currency reserves was about 63 percent. (Editing by Jeffrey Benkoe and Lisa Von Ahn)

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