Reference Message Network reported on May 20th according to a report by the "Nikkei Asian Review" on May 16th, central banks and governments around the world are gradually moving away from the US dollar in foreign exchange reserves. Statistical data show that as of the end of 2024, the proportion of the US dollar in foreign exchange reserves was 57.8%, which is the lowest level at the end of the year since the statistics were initiated in 1995. Starting from the end of last year, central banks have begun to increase other assets such as gold for risk diversification. In addition, the investment value of the Japanese yen has increased, and its proportion in foreign exchange reserves has risen for three consecutive years.

Foreign exchange reserves are funds held by governments of various countries to cope with emergencies, repay external debts, and pay for imports, and can also be used to intervene in the foreign exchange market to suppress sharp fluctuations in exchange rates. Foreign exchange reserves include foreign government bonds, deposits, and gold assets, among others.

Data from the International Monetary Fund (IMF)'s official reserve currency composition (COFER) shows that as of the end of 2024, the total amount of global foreign exchange reserves was $12.36 trillion, of which the proportion of the US dollar was 57.8%, down 0.6 percentage points from the end of 2023. The peak proportion of the US dollar occurred around 2000, once reaching over 70%, but has been declining in recent years.

Governments and central banks around the world are striving to diversify their assets in an effort to reduce dependence on the US dollar. Gold, not being associated with any specific country, is receiving attention as a "stateless currency" and is becoming an option to replace the US dollar.

Data from the World Gold Council (WGC) shows that as of December 2024, Russia held about 2,300 tons of gold in its foreign exchange reserves, accounting for 32%. Russia's gold reserves have nearly doubled compared to 10 years ago.

The United States has implemented multiple financial sanctions against Russia and other countries, expelling them from the US dollar settlement system. In 2022, the United States imposed economic sanctions due to the Ukraine issue, excluding major Russian banks from the SWIFT international payment system.

Professor Sato Kiyotaka of Yokohama National University pointed out that countries dissatisfied with Western countries, including the United States, are seeking to build non-US dollar settlement systems.

In the period of the Trump administration, the de-dollarization trend may further intensify, and people are increasingly concerned about this. The mainstream view is that Trump's policies will not lead to the world abandoning the "base currency US dollar." However, Keiichi Ido, senior strategist and investment advisor at Sumitomo Mitsui Trust Bank, pointed out that there is strong concern in the market about the erosion of the US dollar's position as the base currency.

On one hand, the trend of de-dollarization in foreign exchange reserves is becoming more apparent; on the other hand, the Japanese yen is gaining favor in the foreign exchange reserve sector. As of the end of 2024, the proportion of the Japanese yen in global foreign exchange reserves was 5.82%, up 0.1 percentage points from the end of 2023, and has been rising for three consecutive years. The proportion of the Japanese yen fell below 3% at the end of 2009, but its presence has been gradually increasing in recent years.

Due to the decision by the Bank of Japan to raise interest rates, Japan's economy has returned to the "interest-bearing world." Some argue that given the upward trend in Japanese government bond yields, more central banks are inclined to increase their holdings of the Japanese yen. Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities, pointed out that previously, due to low interest rates, the Japanese yen was unpopular in the foreign exchange reserve sector, but now the trend of avoiding the yen is weakening.

Data released by Japan's Ministry of Finance's trade statistics show that from July to December 2024, in terms of trade between Japan and various countries, the proportion of exports settled in Japanese yen was 35.5%, and the proportion of imports settled in Japanese yen was 24.2%. In trade between Japan and South Korea during the same period, the proportion of exports settled in Japanese yen was 47.7%, and the proportion of imports settled in Japanese yen was 48.1%. According to Atsushi Ueno, senior economist at Nomura Research Institute, countries and central banks holding Japanese yen are mainly concentrated in the Asia-Pacific region, which has close economic ties with Japan.

Kazuya Moroi, chief market strategist at Aozora Bank, believes that Trump's tough stance toward allies may accelerate the trend of more countries taking precautionary measures, selling US dollars, and increasing holdings of Japanese yen.

Daiju Karasawa, chief market economist at Mizuho Bank, said: "More and more people believe that the foreign exchange reserve mechanism will shift from a single-strong US dollar mechanism to a mechanism with options including the euro and Japanese yen. During this process, because Japan is geographically close to other Asian countries, the Japanese yen may become increasingly favored." (Translated by Ma Xiaoyun)

Original article: https://www.toutiao.com/article/7506442704093331995/

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