America’s dominance in the global financial world reflected in a report released by the International Monetary Fund (IMF) yesterday. The U.S. dollar’s share of currency reserves soared to 61.9% in Q1 2020 from the year-ago period, as global central banks amassed the greenback in the wake of the COVID-19 pandemic.
The report, as seen by Reuters, also stated that the U.S dollar’s share remains the highest among all currencies. In the fourth quarter of 2019, the dollar’s share was 60.8%.
Quick facts: Global reserves are assets held by central banks around the world in different currencies, primarily used to support their payment obligations and debts. Global central banks also use their reserves often to support their respective currencies.
However, IMF’s data showed that global reserves dipped to $11.731 trillion from $11.824 trillion in Q4 2019.
Global reserves held in American dollars totaled $6.794 trillion, or roughly 61.9% of allocated reserves in Q1 2020, while in Q4 2019 U.S dollar reserves were at $6.744 trillion, or 60.8% share.
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“While the dollar share of reserves has been trending lower over the last few years, which reversed somewhat in Q1 amid the COVID-19 shock,” said Goldman Sachs in a research note.
“While FX valuation adjustments are especially uncertain given the elevated market volatility, it’s likely that the headline increase was flattered by the dollar’s appreciation as well as its safe-haven status,” the bank added.