The shares of the major currencies in global reserves, as reported to the IMF.
1/
The dollar's weight in global reserves is roughly 3 times the United States weight in the global economy (maybe a bit less0; the euro's weight is close to its weight in the global economy -- and China still punches way below its weight, for obvious reasons!
2/
A far more interesting chart showing global reserves --
The big, interesting important story isn't shifts in share ... but the huge increase in reserve holdings from 02 to 14, and the subsequent reduction in the pace of accumulation.
3/
A technically demanding global reserves chart -- one showing actual flows (purchases + retained interest income) by currency.
The bond market adjustment complicates everything; I don't yet have a good bond market adjustment for the euro.
4/
China's reserve sales in 15-16 obviously figure heavily in that chart ...
and there was a quite large pickup in reserve accumulation in 2020-21 that we now tend to forget.
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And some of the most interesting stories told by the reserves data have nothing to do with China --
For example, EM Asia sold a lot of reserves last summer and fall, in what I think was a successful defense against an overshot of their currencies when oil was high!
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And, as I have noted many times and in many different ways, looking only at formal reserves misses much of the picture these days -- China has as much money in state banks, its policy banks and state investment funds as it holds in its formal reserves ...
7/7
So there are stories to tell that don't hinge on creatively graphing these two lines ...
8/8
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Stability in the central parity rate (the "fix") for the yuan led to a reduction in visible pressure on the yuan in February and March. Settlement was ever so slightly positive in March.
No data for April obviously
1/x
The yuan did depreciate a bit in April (the fix dipped below 7.2) but not by all that much. The small move was likely a bit of a signal to the US, but so far the yuan hasn't central to China's response to this round of tariffs (@marcmakingsense got this right)
2/
The fact that the dollar has slumped after liberation day has in a sense made life easy for the PBOC. The point of depreciating against the US isn't primarily to offset the US tariffs (no way to offset 145%) but to encourage other countries to buy Chinese goods.
3/
China's most reliable proxy for the intervention of the state banking system (together with the PBOC) -- fx settlement -- is out of March. And it suggests that yuan stability "worked"; there were almost no net sales -
1/
The settlement series has been volatile -- large inflows with the carry unwind last fall, large sales in January in anticipation that the yuan might move with Trump -- but it has been very stable the last two months
2/
the PBOC itself had a modest reduction in its foreign holdings, but there was a large buildup in the foreign asset position of the state banks in March (and in q1)
On one hand, I am pleased to see a few more folks recognize that China doesn't just hold Treasuries ...
On the other hand, the numbers here are WAY off. The TIC data shows current holdings of $200 billion, down from ~ $270b at the end of 2023
1/
The right numbers for China.
~ $700 in LT Treasuries in US custodians
~ $300b in LT Treasuries in non US custodians (mostly Euroclear), obviously an estimate
~ $250b in bills and deposits
~ $200b in Agencies in US custodians
~ $300b in equities ...
2/
Known unknowns --
non-US custodies Treasuries (Euroclear is still mostly China imo, but there are other accounts)
the composition of the ~$350b in foreign bonds held by the state banks, which historically haven't appeared in the US data cleanly
Some medical test results need to be interpreted by a trained professional.
China's high frequency cross border data probably should come with the same warning.
The PBOC & state bank data for March is out -- and has a few surprises
1/
The big surprise is that in March, amid the first round of tariffs, the state banks continued to add to their net foreign assets ... net foreign assets topped $1.1 trillion, gross foreign assets are close to $1.3 trillion
2/
So while the PBOC's on balance sheet reserves fell by $10 billion, that wasn't the real story in the data ...
Why good balance of payments data matters for policy
the IMF now wants to focus more on global imbalances (a shift from last year, when the external sector report said there was no problem ...)
The reported current account data suggests Europe is the problem not China
1/
Europe's surplus tho is inflated by tax avoidance in subtle ways (being the home to Ireland and Luxembourg) while China's surplus (just over $400b in the reported data) is -- in my view -- wildly understated in the official Chinese data.
But with a $1 trillion goods surplus and a $200-250b services deficit and a positive $3 trillion net investment position (which should be generating some income ... ) China external surplus should be at around $800b -- way more than China reports
China's reported growth accelerated at the end of 2024 and in the first quarter of 2025, partially on a bit of stimulus and partially on strong investment in manufacturing and net exports ...
As the charts of @PkZweifel show, investment in manufacturing is still increasing -- and driving part of the expansion. net exports contributed a crazy 2.5 pp to q4 growth (y/y) in China's official data
2/
@PkZweifel And the q1 contribution may be nearly as much -- my estimates for export and import volumes suggest export growth slowed moderately, but import volumes contracted (even with a growing economy) generating a similar contribution