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Foreign Exchange Reserves hit 6 trillion
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The number one market (the one that never closes) is huge; World foreign exchange reserves exceeded $6 trillion at the end the third quarter of 2007, with the amount held in dollars shrinking slightly, according to the IMF. The data indicated that of the $3.8 trillion in allocated reserves, about 63.8 percent was held in U.S. dollars, down from 65 percent at the end of the second quarter this year.
About 75.5 percent of total reserves are now in the coffers of governments of developing countries, namely Asia.
Since the fourth quarter of 2003, official holdings among industrialized countries have increased nearly 32 percent to about $350 billion. However, official holdings among developing countries have increased $2.654 trillion, a 139 percent rise that has brought the percentage of total official reserves held by developing countries to over 75 percent, from just below 60 percent in early 2000, the strategists said.
The US dollar's performance, particularly versus currencies of major developed countries, "will be driven by cyclical forces and relative interest rates (and rate expectations) during the year ahead," it said.
The dollar has weakened because of concerns among investors worldwide about the U.S. economy, especially amid a growing number of soured home mortgages over the past year.
The dollar has fallen 11 percent against the euro since the start of 2007 and 24 percent against the 13-nation currency since the beginning of 2006.
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econmod
Broker
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Jan 1, 2008, 11:45 PM
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