LONDON: Nearly 40 central banks have increased their exposure to the euro in the past two years, mainly at the expense of the US dollar, according to a survey of 65 central banks released yesterday.
The poll, conducted by Central Banking Publications, also found that global central bank reserves were expected to rise to nearly US$5 trillion by 2008 from US$3.8 trillion in mid-2004.
The survey of official reserves managers controlling US$1.7 trillion was conducted between September and December last year. It found that 39 central banks reported an increase in their euro exposure while 29 reported a reduction in dollar exposure. Nine banks did not respond to this part of the poll.
“The euro seems to have come of age,” the survey said. “Although euro zone money and debt markets are often seen as lacking the depth, breadth and liquidity of those of the United States, over half of the respondents said that they are now as attractive to invest in as those in America.”
Twenty-four said they had raised their exposure to pound sterling while 16 said they had cut their exposure to the yen.
The survey backs up market speculation that central banks are changing the composition of their currency reserves, mainly to the euro's advantage, although it did not quantify by how much central banks were buying euros or other alternatives to the US dollar. – Reuters