COFER --Q2 Reserves

The most authoritative source of reserve data, the IMF's COFER data was just released for the second quarter. Central banks are rebuilding their reserves. Reserves peaked in Q2 08 at about $6.96 trillion. In Q1 09 they had fallen to $6.49 trillion and in Q2 they rose to $6.80 trillion.

The value of dollar, euro, sterling and yen holdings rose. The value of Swiss franc holdings fell. The dollar's share of reserves slipped to 62.8% from 65.0% in Q1. The decline is consistent with the saw-tooth pattern that has lasted several quarters now where the dollar's share rises in one quarter and falls in the next. The euro's share rose to 27.5% from 25.9% in Q1. Sterling share to 4.3% from 4.0% and the yen's share rose to 3.1% from 2.9%.

In raw terms, the dollar holdings increased to $2.68 trillion, up about $43 bln over the quarter. Of this advanced industrial countries accounted for $30 bln of the increase and the developing countries, the remainder. The value of euro holdings rose by about $123 bln. Developed countries accounted for about $79 bln and developing countries accounted for about $44 bln.

The value of sterling holdings rose by about $21 bln, with developed countries boosting their sterling holdings by $6.6 bln, while developing countries lifted theirs by $14.4 bln.

The value of yen holdings rose by $15.5 bln and the developed countries accounted for the 80% of this increase.

Two important caveats: The first is valuation. Net-net there was little currency movement in Q2, so valuation was not a major factor behind the shifting values. The second is that the currency allocation for more than a third of the reserves (37.2%) are not reported. China is reportedly the major exception to this practice. Perhaps if it had move votes in the IMF it would be more likely to do so, but it is not guarantee.