Global US dollar reserves increase
US dollar reserves have been growing in the last three years, even as some countries have threatened to de-dollarise their reserves. Photo / File
What you need to know:
- Foreign exchange reserves are largely dominated by the dollar, which forms 59.02 percent of the global reserve currency
The International Monetary Fund (IMF) has indicated the currency composition of official foreign exchange reserves is largely dominated by the dollar, which forms 59.02 percent of the global reserve currency.
The dollar is followed by the Euro at 19.77 percent, while the Japanese Yen and the British Pound follow closely with 5.47 percent and 4.85 percent, of global reserves, respectively.
Other reserve currencies include the Chinese Renminbi, which forms 2.58 percent while the Canadian and Australian dollars form 2.43 percent and 1.98 percent, respectively.
The composition, the IMF said, remains in favour of the US dollar despite structural shifts in the international monetary system.
In Uganda, the US dollar remains the main reserve currency. Last month Bank of Uganda said Uganda’s foreign exchange gross reserves were projected at $4b, which was equivalent of four months of import cover of goods and services.
The US dollar is the most traded currency in Uganda constituting more than 90 percent of the foreign exchange transactions with a sum of $150m traded daily in the interbank market.
The IMF also indicated that on average, among 75 central banks surveyed, the US dollar makes up 59 percent of reserves, up from 57 percent in 2022 and 56 percent in 2021.
“This is likely to be a result of the flight towards safety following Russia’s war in Ukraine and the global inflation scare. Valuation effects from the broad-based strengthening of the US dollar in 2022 plays a role too,” IMF said, noting that the picture from reserve management over the last few years does not point to a trend of de-dollarisation.
Some countries have threatened to de-dollarise their reserves, even as data from the IMF indicates that global dollar reserves have been increasing in the last three years.
