The Reserve Bank of Australia (RBA) slashed euro holdings in its currency reserves to 20 percent from 45 percent in 2012 and recently added the South Korean won.
The central bank said on Wednesday it had allocated 5 percent of net reserves to the won, in line with holdings of the Japanese yen, Canadian dollar, British pound and Chinese renminbi. The share of US dollars rose to 55 percent from 45 percent in 2012, when reports on the RBA website indicated the pound and renminbi were not part of its benchmark portfolio.
The euro’s dwindling share in the RBA’s currency stockpile is part of a move by central banks around the world to diversify away from the single currency after the euro region was rocked by a sovereign debt crisis and then an economic malaise that’s been hard to shake. The common currency’s share among allocated global reserves fell to 20.34 percent in the third quarter of 2015 from 27 percent six years earlier, according to data from the International Monetary Fund. The currency slid more than 20 percent over that period.
“Some of the decrease in allocation to euro reflects a fall in the euro-dollar,” said Joseph Capurso, a currency strategist at Commonwealth Bank of Australia in Sydney. “However, most of the reduction in allocation to euro reflects a policy decision by the RBA to reduce exposure to euro and increase exposure to other currencies.”
The euro was unchanged at $1.0868 as of 10:45 a.m. in Tokyo and is little changed since December 31 after back-to-back annual declines of about 21 percent in the previous two years.
RBA came into being in 1960 as Australia’s central bank and banknote issuing authority, when the Reserve Bank Act 1959 removed the central banking functions from the Commonwealth Bank.
The bank has the responsibility of providing services to the Government of Australia in addition to also providing services to other central banks and official institutions. It currently consists of the Payments System Board, which governs the payments system policy of the bank, and the Reserve Bank Board, which governs all other monetary and banking policies of the bank.