The world’s central banks are gradually reducing the foreign currency reserves after the decade-long surge (since 2004 to 2014 the reserves increased fivefold). At the end of March 2015, the indicator amounted to $11.6trillion against the highest level of $12.03trillion at the end of August 2014.
The drop may be overestimated because of the strengthening US dollar. Nevertheless, some economists suppose that the signals of the trend’s changes are difficult to understand.
The reduction in reserves has several implications for global markets. It could add to the euro decline and dampen demand for US Treasury bonds. Emerging-market countries could face the problem of boosting their money supply.
Developing countries, which hold about two-thirds of global reserves, in the October- December period, spent $54 billion, the most since 2008. Russia’s supply tumbled 25 % over the past year to $361 billion at the end of March. China, the world’s largest reserves holder, reduced them from $4 trillion in June to $3.8 trillion at the end of December. Saudi Arabia’s reserves shrank to $721 billion compared to $10 billion.
Economists at Deutsche Bank suppose that this tendency will remain intact for the next following months amid the sluggish economic growth in emerging counties and low oil prices.
According to the estimates of the IMF, the euro’s share of global reserves dropped to 22% last year, the lowest since 2002, while the dollar’s share rose to a five-year high of 63%.
