New York Fed: Shrinking Dollar Reserve Share Doesn't Signal Broad Central-Bank Selling

Huoxing Finance reports that a New York Fed study released on September 7 finds the U.S. dollar's share of global official foreign-exchange reserves has fallen from 64% to 56% over the past decade, but the shift does not reflect systematic selling of dollar assets by central banks. Researchers said there is limited evidence of widespread official efforts to diversify away from the dollar. The study shows that in two separate periods since 2015, the number of countries increasing their dollar holdings was roughly equal to the number reducing them. The drop in the dollar's reserve share was mainly driven by concentrated portfolio adjustments by a small group of large reserve managers, not a broad global reallocation. From 2015 to 2019, the move was largely attributed to two central banks; from 2019 to 2023, Mexico and Morocco also became meaningful contributors. The New York Fed said most economies still manage reserves for conventional reasons—maintaining dollar liquidity, supporting exchange-rate stability, and buffering funding shocks—rather than deliberately steering away from the dollar. IMF data also shows the dollar's reserve share fell to its lowest level since 1995 in January this year, primarily due to passive valuation effects from a weaker U.S. dollar rather than large-scale central-bank sales.