Global foreign exchange reserves surge, but dollar share slips: IMF

Global central banks' holdings of dollars rose 4 percent to a record $2.24 trillion in the first quarter of 2007, although the greenback's share of total reserves slipped to its lowest in at least a decade, data from the International Monetary Fund showed on Friday.
The IMF data, which covers around two thirds of the world's foreign exchange reserves, showed the dollar's share of the $3.5 trillion of global reserves of which the composition is known slipped to 64.2 percent from 64.6 percent in the final quarter of last year.
Quarterly data is only available as far back as 1999, but the last time the dollar's share fell this low on an annual basis was 1996, when it stood at 62.1 percent. The euro's share rose to a record 26.1 percent in the first quarter from 25.9 percent. The euro gained almost two percent against the dollar in the quarter, which suggests that valuation gains may explain much of the rise in its share.
Total global reserves surged 5.2 percent to $5.3 trillion, as China and other emerging economies' central banks continued to amass foreign currencies due to hefty trade surpluses and intervention to keep their currencies from rising.
The IMF data is closely watched, since speculation has risen in recent years that central banks may be looking to reduce the large proportion of the dollar in their foreign exchange holdings to minimise exposure to dollar declines.
So far, however, the evidence for a significant shift has been patchy. Although the dollar's share has dropped from around 71 percent in 1999, the year the euro was launched, it has remained relatively stable over the past three years.
And total holdings of dollars have continued to surge. Developing countries held $1.2 trillion of dollar reserves at the end of the first quarter, more than triple their holdings of just a decade ago.