The IMF has released its “Composition of Official Foreign Exchange Reserves” (COFER) data for Q2 and we note the Australian and Canadian dollars have seen a pick up in demand.
The sizeable buying of CAD and AUD by advanced central banks totalled almost $30bn in valuation adjusted terms.
"The second quarter saw large overall inflows into Canadian and Australian assets by central banks. This increase came mainly from developed markets, which saw combined flows of $29bn into the two currencies. This is especially large compared to the absolute size of central bank holdings of these currencies," says Jens Nordvig at Nomura.
CAD was a particularly strong recipient of the inflows, with over $19bn in Q2 from advanced central banks.
Euro also sees increased demand
The Euro share of total reserves increased in Q2.
"This not only reflects the previously mentioned intervention in USD but also the Euro appreciation on the quarter, as the data is reported in currency translated terms as of quarter-end. For context, as of the end of 2011, when EURUSD was marginally lower than the level at the end of Q2, the EUR share of EM reserves was 27.3% while it has now fallen to 23.8% as of Q2," says Nordvia.