5.7.11

Currency basket III: benchmarks

To continue with our approach about building a currency basket, we will try to look for different benchmarks. Perhaps, you don´t know but this question is one of the most complicated nowadays. For instance, the Central Bank of China keeps the percentage of their reserves portfolio in secret (that would be a really good benchmark!).

So let´s start with our first option: the SDR (Special Drawing Rights) designed by the IMF. They held the following: USD-41.9% (down), EUR-37.4% (up), JPY-9.4% (down), and GBP-11.3%.(up). There is an interesting link about the concept of a new reserve currency here.

Our second benchmark is COFER (Currency Composition of Official Foreign Exchange Reserves) with the following portfolio: USD-60,7%, EUR-26.6%, GBP-4.1%, JPY-3.8%, CHF-1.1%, and others-4.7%.

Russia follows a bi-currency basket (0.55 USD, 0.45 EUR) to guide its interventions. Reciently it has broaden its exchange bands. Lately it has added AUD and CAD to its reserves. Its portfolio is formed by USD-46%, EUR-41%, GBP-9%, JPY-2%, AUD-1%, and CAD-1%, but it will probably continue swithcing USD for AUD and CAD.

So to sum up, even though EUR is under attack, it has kept increasing its importance in the world (between 30 and 40% of the reserves). USD is going down, but it won´t probably dissapeared (probably less 50%). It is amazing how GBP is keeping its percentage (even slightly going up), and how JPY is going down abruptly. AUD, CAD, and CHF are still marginal.

5/7/2011