Global foreign exchange reserves drop to $11.6tr

GMT 21:57 2015 Tuesday ,07 April

Arab Today, arab today Global foreign exchange reserves drop to $11.6tr

Credit Suisse Group AG
New York - QNA

Global reserves declined to $11.6 trillion in March from a record $12.03 Trillion in August 2014, halting a five-fold increase that began in 2004, according to data released by a private agency.
The decline follows after central banks in Asia added an average $824 Billion to reserves every year for the last decade, a Bloomberg reports says.
The fall in forex reserves looks acute because a stronger dollar reduced value of other reserve currencies such as the euro.
The decline could make it difficult for emerging-market countries to boost their money supply and shaky economic growth. It could add to declines in the euro; and it could damp demand for US Treasury bonds, the report says.
Cutting out the effect from foreign-exchange swings, Credit Suisse Group AG estimates that developing countries, which hold about two-thirds of global reserves, spent a net $54 Billion of this stash in the fourth quarter, the most since the global financial crisis in 2008.
China, the world’s largest reserve holder, together with commodity producers contributed to most of the declines, as central banks sold dollars to offset capital outflows and shore up their currencies.
A Bloomberg gauge of emerging-market currencies has lost 15 percent against the dollar over the past year.
China cut its stockpile to $3.8 Trillion in December from a peak of $4 Trillion in June, central bank data show.
Russia's supply tumbled 25 percent over the past year to $361 Billion in March, while Saudi Arabia, the third-largest holder after China and Japan, has burned through $10 Billion in reserves since August to $721 Billion.
The euro has declined against 29 of 31 major currencies this year as the European Central Bank stepped up monetary stimulus to avert deflation. The currency tumbled to a 12-year low of $1.0458 on March 16, before rebounding to $1.0922 in New York Monday.

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