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European Central banks shift reserves away from US
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by mtippett | January 24, 2005 at 10:05 am
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The Financial Times is reporting that:
Central
banks are shifting reserves away from the US and towards the eurozone
in a move that looks set to deepen the Bush administration's
difficulties in financing its ballooning current account deficit.
In actions likely to undermine the dollar's value on currency markets,
70 per cent of central bank reserve managers said they had increased
their exposure to the euro over the past two years. The majority
thought eurozone money and debt markets were as attractive a
destination for investment as the US.
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at 21:45 on February 22nd, 2005
as oil prices jumped above $51 a barrel and the dollar slid on concerns that other central banks would follow South Korea's lead in diversifying reserves out of U.S. assets.
The dollar also weighed on markets as the greenback suffered its biggest intraday fall against the euro since August. South Korea's central bank said on Monday it planned to diversify its reserves, the world's fourth largest, into a greater variety of currencies.
The move by South Korea fueled speculation that other central banks would follow suit. Fears of a weaker dollar diminishes foreign investors' appetite for U.S. assets.