Central banks have increased the share of the yen in reserves to a 13-year high

Central banks around the world in April–June increased the share of the yen in the total amount of its reserves to 4.5% — its highest level since 2003, according to the International monetary Fund (IMF), cited by Bloomberg.

This coincided with the strongest quarterly strengthening of the yen against the dollar in almost eight years — by 1.8%. Against the Euro the yen rose 0.7%.

Seriously increasing share of people’s Bank of China, whose reserves amount to $3.2 trillion in 2016, the regulator sells government bonds and increasing its investment in Japanese bonds and notes. As of June, the volume of investments amounted to ¥10.1 trillion ($99,6 billion) versus ¥2 trillion ($2.1 billion).

The share of the yen in international reserves of Central banks reached a high of 8.5% in 1991. Subsequently, the weakening of the Japanese economy and the emergence of the Euro has led to a gradual decline. However, the yen is the third currency for trade settlements and fourth for international payments.

October 1 decreased the share of the yen in the basket valuation of the special drawing rights (SDRs) from 9.4% to 8.33%, in connection with the inclusion in the basket of the yuan. The share of the Chinese currency in the basket is of 10.92%. The dollar’s share declined 41.9% to 41.73% share of the Euro — from 37.4% to 30,93%, the share of the pound has decreased from 11.3% to 8.09%.

The SDR is an international reserve asset created by the IMF in 1969 to replenish official reserves of member countries. As reported, the IMF Executive Board decided to change the composition of the SDR basket of currencies in November 2015, to include the yuan. October 1, 2016, this decision came into force with the completion of the transition period.