US Dollar Share of Global Foreign Exchange Reserves Amounts to 58.8%- IMF

International Monetary Fund data showed that the share of the US dollar in international foreign exchange reserves reported by the fund amounted to 58.8% in the first quarter, unchanged from that in the last three months of 2021.

The dollar remains the largest reserve currency held by global central banks. The share of the euro fell to 20% in the first quarter from 20.6% in the previous three months. In 2009, the euro recorded its highest share at 28%.

Global reserves, reported in US dollars, are the assets of central banks held in different currencies that are primarily used to support their obligations. Central banks sometimes use reserves to help support their currencies.

“The IMF data is not a huge surprise after what happened in Ukraine... The dollar is getting stronger and the euro is weaker, and I think these trends won't change much in the near term,” said Kenneth Brooks, a forex strategist at Societe Generale in London.

The dollar index rose 2.7% in the first quarter, supported by the Fed's monetary policy tightening. So far this year, the US currency has appreciated by 10% against a basket of major currencies.

The US central bank raised its benchmark overnight interest rate by a quarter of a percentage point at its March policy meeting, following a 50 basis point rate increase at its May meeting.

However, the Fed raised interest rates by 75 basis points at its policy meeting earlier this month to stem the turbulent rise in inflation. It also predicted a slowdown in the economy and an increase in unemployment in the coming months.

International Monetary Fund data showed that the Chinese yuan's share of currency reserves reached 2.8% in the first quarter, largely unchanged from the fourth quarter of last year.

But in absolute terms, the central bank's yuan holdings fell 0.2% to $336.39 billion. The International Monetary Fund began tracking the yuan's share in 2017.

Against the US dollar, the Chinese yuan fell 0.2% in the first three months of this year, but it has fallen 5.3% since the start of 2022.

The yen's share of currency reserves was 5.3%, compared to 5.5% in the last quarter. But in dollar terms, the yen's reserves fell about 6% to $625.68 billion.

International Monetary Fund data also showed that global reserves fell to $12.55 trillion in the first quarter from $12.92 trillion in the last three months of 2021.