By Brendan Murray and Matt Townsend
Sept. 30 (Bloomberg) -- The dollar’s share of global currency reserves fell in the second quarter to the lowest level in a decade as the holdings of euros rose to a record, according to the International Monetary Fund.
The U.S. currency’s portion dropped to 62.8 percent in the period ended June 30, from 65 percent in the prior quarter and 62.9 percent a year earlier. The euro’s share rose to a record 27.5 percent from 25.9 percent while the pound and yen gained.
The increase in the euro’s shares may encourage more criticism of the dollar’s role as the world’s main reserve currency. World Bank President Robert Zoellick said in a speech on Sept. 28 that the dollar’s status will be challenged and shouldn’t be taken for granted.
“It keeps the conversation going,” said Samarjit Shankar, a managing director for the foreign-exchange group in Boston at BNY Mellon Corp., the world’s largest custodial bank, with more than $20 trillion in assets under administration. “In the grand scheme of things, these trends are very, very gradual.”
Turkish Deputy Prime Minister Ali Babacan said today at a news conference that the role of special drawing rights as a global currency may be discussed during meetings of the World Bank and IMF in Istanbul next week. SDRs, a unit of account based on a basket of currencies, have been discussed as a long- term alternative to the dollar.
BRIC Nations
The BRIC nations, made up of Brazil, Russia, India and China, considered in June buying each other’s bonds and swapping currencies to reduce dependence on the greenback.
The U.S. currency’s value dropped 6.2 percent in the second quarter of this year, the steepest quarterly decline since the first three months of 2008, according the Dollar Index, which IntercontinentalExchange Inc. uses to track the U.S. currency against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona.
“There is every reason to believe that the euro’s acceptability could grow,” Zoellick said this week. “The greenback’s fortunes will depend heavily on U.S. choices” on inflation, the budget deficit and financial-industry oversight, he said.
Treasury Secretary Timothy Geithner reiterated last week after the Group of 20 summit in Pittsburgh that “a strong dollar is very important in the United States.” He also said the government’s decisions on economic, fiscal and monetary policy will help determine the currency’s fate.
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The U.S. currency’s portion dropped to 62.8 percent in the period ended June 30, from 65 percent in the prior quarter and 62.9 percent a year earlier. The euro’s share rose to a record 27.5 percent from 25.9 percent while the pound and yen gained.
The increase in the euro’s shares may encourage more criticism of the dollar’s role as the world’s main reserve currency. World Bank President Robert Zoellick said in a speech on Sept. 28 that the dollar’s status will be challenged and shouldn’t be taken for granted.
“It keeps the conversation going,” said Samarjit Shankar, a managing director for the foreign-exchange group in Boston at BNY Mellon Corp., the world’s largest custodial bank, with more than $20 trillion in assets under administration. “In the grand scheme of things, these trends are very, very gradual.”
Turkish Deputy Prime Minister Ali Babacan said today at a news conference that the role of special drawing rights as a global currency may be discussed during meetings of the World Bank and IMF in Istanbul next week. SDRs, a unit of account based on a basket of currencies, have been discussed as a long- term alternative to the dollar.
BRIC Nations
The BRIC nations, made up of Brazil, Russia, India and China, considered in June buying each other’s bonds and swapping currencies to reduce dependence on the greenback.
The U.S. currency’s value dropped 6.2 percent in the second quarter of this year, the steepest quarterly decline since the first three months of 2008, according the Dollar Index, which IntercontinentalExchange Inc. uses to track the U.S. currency against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona.
“There is every reason to believe that the euro’s acceptability could grow,” Zoellick said this week. “The greenback’s fortunes will depend heavily on U.S. choices” on inflation, the budget deficit and financial-industry oversight, he said.
Treasury Secretary Timothy Geithner reiterated last week after the Group of 20 summit in Pittsburgh that “a strong dollar is very important in the United States.” He also said the government’s decisions on economic, fiscal and monetary policy will help determine the currency’s fate.
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