Re: currency discussion

[Doug Henwood <dhenwood@xxxxxxxxx>]

I think the fluctuations around the long-term trend (shrinking role of
the $ as reserve currency) has a lot to do with fluctuations in the
currency markets, which result in compositional changes for several
reasons: portfolio shifts (aversion to depreciating currencies),
valuation changes, residues of foreign exchange interventions, etc. In
its 1993 annual report, the IMF noted that the changes are almost
entirely the result in shifts by the OECD countries; the Third World
composition remains essentially unchanged. The IMF describes the
long-term trend as "an ongoing diversification of the currency
composition of foreign exchange reserves."

It will be a richly symbolic change when oil is no longer priced in $.

Doug

Doug Henwood [dhenwood@xxxxxxxxx]
Left Business Observer
212-874-4020 (voice)
212-874-3137 (fax)


On Sat, 9 Jul 1994, paul burkett wrote:

> I am wondering what the following data (on the percent shares of different
> currencies in total official foreign reserve holdings by central banks and
> treasury departments) has to say about the discussion on the future role of
> the $US compared to the mark and yen.  (The data are from the IMF's annual
> report, various issues):
>
> CURRENCY   1975   1983   1989   1990   1991   1992
>
>  $US       79.4   71.1   60.2   57.5   58.4   64.4
>
>  Pound      3.9    2.5    2.7    3.4    3.6    3.2
>
>  Mark       6.3   11.7   19.0   18.6   16.5   13.0
>
>  Yen        0.5    4.9    7.7    8.8    9.4    8.1
>
>  Other      9.9    9.8   10.4   11.7   12.1   11.3
>
>
>       I don't have the 1993 data at hand; nonetheless a few questions come to
> mind.  First, does the seeming recovery of the $US as a share in official
> reserves indicate anything structural or is it just a short-run phenomenon
> connected with particular events during 1990-92?  Second, how important are
> official reserve holdings figures of this type as an indicator of the overall
> international role of the dollar relative to the other currencies?  Third, why
> did the percentage share in official reserve holdings accounted for by the Mark
> decline so much over 1989-92?  (Incidentally the figures for "other" mask an
> absolutely small but relatively significant increase in the use of the Franc
> as a reserve currency.)  Regards, Paul Burkett (ecburke@indst)
>