September 30, 2015 / 2:43 PM / 4 years ago

U.S. dollar share of FX reserves dips in second quarter, euro's at 13-year low

NEW YORK/LONDON (Reuters) - The U.S. dollar’s share of allocated global currency reserves slipped for the first time in five quarters, while the euro’s share touched a 13-year low, data from the International Monetary Fund showed on Wednesday.

A picture illustration shows U.S. 100 dollar bank notes taken in Tokyo August 2, 2011. REUTERS/Yuriko Nakao

The greenback’s share fell in the second quarter to 63.7 percent of the total allocated reserves, equivalent to $4.249 trillion, from a 64.1 percent share in the first three months of the year.

The decline in the dollar’s share came amid a growing view that central banks, especially those in emerging markets, have been selling their holdings of the greenback in order to support their own deflating currencies.

The euro’s share, meanwhile, was steady in the second quarter at 20.5 percent, from 20.7 percent in the firs. But that 20.5 percent share was the smallest in 13 years. At its peak, in 2009, the euro’s share of reserves was 28 percent.

Global foreign exchange reserves, meanwhile, rose in the second quarter, breaking a shrinking trend that started in the third quarter of 2014.

Global reserves rose to $11.46 trillion in the second quarter, from $11.44 trillion in the first quarter, data showed The total amount of allocated currency holdings rose to $6.66 trillion from $6.06 trillion in the prior quarter.

Analysts, however, said the latest data did not capture the recent drawdown in China’s FX reserves. China’s reserves posted their biggest monthly fall on record in August, reflecting its attempts to halt a slide in the yuan and stabilize financial markets.

China’s reserves, the world’s largest, fell $93.9 billion last month to $3.557 trillion, central bank data showed on Monday.

“The decline in FX reserves is here to stay with various EM central banks still forced to spend reserves as they try to deal with slower growth abroad and at home, a strong U.S. dollar, and an overhang of FX liabilities and weaker domestic currencies,” said Valentin Marinov, head of G10 currency strategy at Credit Agricole in London.

Also in the second quarter, the IMF has released for the first time the names of the participating economies, which showed 146 countries reporting their reserves.

It has long been speculated that China does not report its reserves to the IMF and the country’s asset holdings are part of the unallocated reserves component totaling $4.793 trillion.

But on Wednesday, the IMF said China has reported in the second quarter a representative portfolio on a partial basis and will gradually increase to full coverage of foreign exchange reserve assets within two to three years.

Reporting by Gertrude Chavez-Dreyfuss; Editing by Chizu Nomiyama and Marguerita Choy

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