Reserve Bank of Australia cuts US dollar reserves to 45%
- The Reserve Bank of Australia cuts US dollar holdings to 45%.
- Central banks diversify assets to hedge against growing global political risks.
- The decision shifts target allocations towards the euro and other liquid currencies.
The Reserve Bank of Australia reduced its target US dollar foreign currency reserve allocation from 55% down to 45%.
This adjustment brings Australia's US dollar reserves to their lowest level since 2012, contrasting with historical target averages.
“The central bank has discreetly reduced the target share of US dollars to 45% from 55% and shifted that allocation to euros,” said Deutsche Bank Macro Strategist Lachlan Dynan.
The central bank shifted the remaining balance to increase its euro allocation to 30%, while assigning 5 per cent each to Japanese yen, Canadian dollars, Chinese yuan, British pounds, and South Korean won.
The shift reflects broader global diversification strategies as central banks manage exposure to US debt, which reached US$40 trillion in August.
A survey by the Official Monetary and Financial Institutions Forum indicated that global central banks are actively trimming US dollar exposure over the next decade.
The reallocation trend has boosted demand for alternative assets, with gold reaching record highs above US$5,500 per ounce earlier this year.
