NEW YORK (Reuters) - The U.S. dollar’s share of currency reserves reported to the International Monetary Fund tumbled to its lowest in 25 years in the fourth quarter of last year, IMF data showed on Wednesday.
The greenback’s share slid to 59% in the fourth, from 60.5% in the third, declining for three straight quarters. Its share in 1995 was 58%.
The dollar though still has the largest share of currency reserves held by global central banks. It posted a high of nearly 73% share in 2001, data showed.
“For the most part, Wall Street and the rest of the world are convinced that we’re bound to see a weaker dollar. If you take a look at the money growth, the initiatives from the Biden administration, it’s only going to get worse,” said Edward Moya, senior market analyst at online FX trading platform OANDA.
“The ballooning trade deficit is going to continue and you’re probably going to see that the longer-term outlook for the dollar is going to be much weaker.”
Global reserves are assets of central banks held in different currencies and are used primarily to support their liabilities. Central banks sometimes use reserves to help support their respective currencies.
The euro’s share, meanwhile, rose to 21.2% in the fourth quarter of last year, compared with a 20.5% share in the third. The single currency’s share in the fourth quarter was the highest since 2014.
In 2009, the euro hit its highest share of FX reserves at 28%.
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