**Global FX Reserve Managers Sell Yen and Aussie: Insights from MUFG Q1 Data**
*Based on original reporting by Justin Low at ForexLive. Supplemented with research from Reuters, Bloomberg, and recent IMF data.*
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Currency reserve allocations by central banks and institutional managers are closely watched in the foreign-exchange (FX) world, with their moves having significant ripple effects across the global currency markets. The first quarter data for 2024, highlighted in an analysis by MUFG and reported by Justin Low at ForexLive, reveals a notable trend: FX reserve managers have been substantial net sellers of both the Japanese yen (JPY) and the Australian dollar (AUD). This shift, observable in the latest quarterly numbers, raises questions about the broader dynamics at play in global reserves and what it might signal about central bank views on risk, yield, and macroeconomics.
This article will summarize the findings, provide additional context from other sources, and explore the implications for traders, investors, and policymakers.
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### Key Findings from MUFG: Q1 Reserve Management Flows
MUFG, one of Japan’s largest financial institutions, has examined newly-published International Monetary Fund (IMF) Currency Composition of Official Foreign Exchange Reserves (COFER) data to track FX allocation changes among central bank reserve managers in the first quarter of 2024. The core findings:
– **Substantial net selling of Japanese yen (JPY) and Australian dollar (AUD) by global FX reserve managers.**
– **Largest quarterly net sales of JPY and AUD by reserve managers since records began.**
– **Most proceeds diverted into U.S. dollars (USD), contributing to broader USD strength.**
– **Smaller increases in holdings of Swiss franc (CHF) and Canadian dollar (CAD).**
– **Euro (EUR) allocations remained moderately stable.**
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### The Numbers: IMF COFER Data Insights
The COFER dataset, maintained by the IMF, is the most authoritative source for tracking the composition of central bank FX holdings across the world. According to the Q1 2024 report:
– **Total allocated reserves increased to approximately $12 trillion.**
– **USD share rose to 58.9%, the highest since 2014.**
– **EUR holdings remained relatively stable at 20.1%.**
– **JPY’s share fell to 5.2%, the lowest since 2016.**
– **AUD’s share went down to 1.6%, matching the lowest since 2012.**
– **Other currency holdings (CHF, CAD, GBP) saw minimal changes.**
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### Interpretation: Why Are Reserve Managers Selling JPY and AUD?
Central bank reserve managers adjust their currency holdings for several reasons–typically a blend of return maximization, diversification, and, occasionally, political or strategic concerns. The Q1 shift away from JPY and AUD can be attributed to several overlapping factors:
#### Japanese Yen (JPY):
– **Ultra-Loose Monetary Policy:**
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