Central banks cut US dollar reserves

Central banks world-wide are increasingly diversifying their reserves, including cutting holdings of dollars, according to a survey sponsored by Royal Bank of Scotland Group Plc, the UK's second-largest bank, the website of “Financial Brains” Informational and Consultancy Agency announces, Info-Prim Neo reports. This is the conclusion of the Royal Bank of Scotland, which sponsored a survey among the most import banks of the world. The researchers of Royal Bank of Scotland consider the study as an annual independent source of information about the trends in the field of banking reserves in the central banks. The answers of the questioned specialists unveil significant changes in the 5 trillion US dollar market. According to the cited source, Italy, Russia, Sweden and Switzerland have made “major adjustments” in foreign-exchange holdings favouring the euro and the British pound. China and Iran also plan to considerably cut their reserve of dollars, the report said. “Central banks are open to saying they’ve been diversifying to improve returns and reduce exposure to any single currency,” said Sean Callow, senior currency strategist at Westpac Banking Corp in Singapore. “There’s no doubt that when they say ‘diversification’ they mean selling dollars.” The report of the Royal Bank of Scotland, Reserve Management Trends 2007, shows that nineteen of forty-seven central banks surveyed had cut their share of dollars, while 10 said they had increased holdings. Twenty-one respondents said they had increased their reserves of euros, compared with seven who said they had reduced their holdings of the single currency. The 47 respondents in the survey hold a total of USD 1.5 trillion in reserve assets. Head of National Bank’s Press Service Rodica Teleuca told Info-Prim Neo that “the structure of Bank’s reserve assets depends on several factors, such as the structure of the external debt – both public and private, the currencies used in the trade transactions, currencies used in the internal transactions. The structure Bank’s reserves will change depending on the way these factors will change”, the cited source specified.