Foreign exchange reserves are essential to a nation’s economic well-being. Monetary authorities use these external assets for many purposes, but mostly to ensure a central government agency has backup funds if the national currency rapidly devalues.
According to ForexSchoolOnline.com, total foreign exchange reserves increased by $810bn in the last five years, reaching an $11.73trn value in the first quarter of 2020.
U.S. Dollar Accounts for 62% of Foreign Exchange Reserves
Foreign exchange reserves can include deposits, banknotes, bonds, treasury bills, and other government securities. In 2005, the total value of these external assets worldwide reached $4.32trn, revealed Statista and International Monetary Fund data. In the next five years, this figure rose by $4.94trn, reaching a total of $9.26trn at the end of 2010.
Statistics show that by the end of 2013, global foreign exchange reserves jumped to $11.68trn. However, this figure fell to $10.71trn in the next three years. The IMF data indicate the total value of these assets rose by $1.02trn since 2016.
Analyzed by currency, the U.S. dollar accounted for nearly 62% of global foreign exchange reserves, with almost $6.8trn worth assets as of the first quarter of 2020.
Euro ranked as the second-most used reserve currency, with $2.19trn worth assets, or more than 20% of global forex reserves. Japanese Jen follows with and $624bn in currency reserves, and 5.70% market share, respectively.
China Holds Nearly One-third of Global Currency Reserves
China has by far the largest forex reserves, with nearly $3.4trn worth assets as of May 2020, or almost 30% of world`s currency reserves.
The International Monetary Fund data revealed that Japan ranked as the second country on this list with $1.64trn in reserve assets, twice less compared to leading China.
Statistics show that Japanese forex reserves increased by $242bn in the last four months.
As the third country on this list, Switzerland had $913.5bn in foreign exchange reserves as of May, nearly $58bn increase in four months.
Russia and India follow, with $566.1bn and $495.7bn worth assets, respectively.
The United States forex reserves, which are mostly euros and yen, were valued at $133.2bn in July.