An important thing to keep our eyes on these days.
By Wolf Richter for WOLF STREET.
The US dollar as dominant global reserve currency has been on a slow long-term downward trend, interrupted by upticks. And now we had an uptick, when the dollar gained share.
The share of the USD as global reserve currency rose to 59.0% in the first quarter of 2023, after having dropped to 58.6% in Q4, which had been the dollar’s lowest share since 1994, according to the IMF’s recent COFER data.
The US dollar as global reserve currency means that foreign central banks and foreign official institutions hold USD-denominated assets, such as Treasury securities, agency securities, corporate bonds, mortgage-backed securities, etc. They also hold competing foreign exchange reserves in other currencies, such as in euros (#2), and in yen (#3). But holdings in their own local currency are not foreign exchange reserves and are not included; so the Fed’s holdings of US Treasuries and MBS are not included; the ECB’s euro-denominated assets are not included, etc.