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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: regli who wrote (58951)4/21/2006 10:56:57 AM
From: ild  Read Replies (3) of 110194
 
Dollar falls as Sweden slashes holdings in half
By Steve Johnson
Published: April 21 2006 12:28 | Last updated: April 21 2006 12:28

The US dollar fell against the euro in European morning trade on Friday as Sweden’s central bank said it had slashed its dollar holdings almost in half.


The Riksbank revealed that it had cut the proportion of dollars in its reserves from 37 to 20 per cent, as well as selling off all its holdings of yen, which previously amounted to 8 per cent of its reserves.

The central bank balanced these disposals by increasing its holdings of euros from 37 to 50 per cent, as well as building a new Norwegian krone position of 10 per cent.

Although Sweden’s reserves are small, at around $21bn, and the Riksbank said its re-weighting was complete, the news thrust the ongoing issue of potential central bank diversification out of the dollar back into the limelight.

“Today’s announcement will merely add to market fears that the end to the Federal Reserve tightening cycle will encourage more diversification away from the dollar, and into the most liquid alternative of the euro,” said Chris Turner, head of FX strategy research at ING Financial Markets, who reiterated its view that the euro will return to $1.35 by the end of the year.

news.ft.com
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