The share of the Chinese yuan in global reserves fell to its lowest in three years. This was influenced by Russia's invasion of Ukraine, writes Reuters.
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As of the end of last year, of the $11.45 trillion in global foreign exchange reserves, only 2.29% was held in yuan. This is the lowest share in the fourth quarter of 2020 and significantly lower than the peak of 2.83% in the first quarter of 2022.
The attractiveness of the yuan as a global reserve currency is fading, the agency notes. Central banks have reduced the yuan's share of their foreign exchange reserves in each of the last seven quarters, down by a fifth in nearly two years.
Goldman Sachs currency strategist Michael Cahill explains that Chinese government bonds no longer offer the same returns , which they had in 2016, when the IMF first included the yuan in its data. At that time, Chinese securities looked more attractive compared to bonds of other developed countries.
He also believes that it is no coincidence that the yuan's share of world reserves began to decline in the first quarter of 2022, when Russia, which Beijing believes its ally, started a full-scale war in Ukraine.
Of the ten countries that regularly publish data on the geographical breakdown of their reserves, not one has increased its yuan reserves since the first quarter of 2022, IMF data shows.
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