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Analysis of the management of currency composition of foreign exchange reserves in Australia

Author

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  • Soesmanto, Tommy
  • Selvanathan, Eliyathamby A.
  • Selvanathan, Saroja

Abstract

Following the global financial crisis (GFC) in 2007, questions have been raised regarding the prospect of the US dollar continuing its dominance as the principal reserve currency. The increased volatility of the US dollar exchange rate and the uncertain sustainability of the US economic growth since that time have created pressure for central banks around the globe to shift their US dollar reserve holdings to other currencies. Amongst the major reserve currencies, the euro has been considered by a number of central banks to be an alternative currency to the US dollar. In light of the above considerations, this paper aims to present an empirical analysis on the different transaction factors that affect the currency composition holding of the reserve currencies held by the central bank of Australia, the Reserve Bank of Australia (RBA).

Suggested Citation

  • Soesmanto, Tommy & Selvanathan, Eliyathamby A. & Selvanathan, Saroja, 2015. "Analysis of the management of currency composition of foreign exchange reserves in Australia," Economic Analysis and Policy, Elsevier, vol. 47(C), pages 82-89.
    • Handle: RePEc:eee:ecanpo:v:47:y:2015:i:c:p:82-89
    DOI: 10.1016/j.eap.2015.07.002
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    References listed on IDEAS

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    Cited by:

    1. Falk Hendrik Laser & Jan Weidner, 2022. "Currency Compositions of International Reserves and the Euro Crisis," Open Economies Review, Springer, vol. 33(5), pages 917-944, November.
    2. Laser, Falk Hendrik & Weidner, Jan, 2020. "Currency compositions of international reserves and the euro crisis," Darmstadt Discussion Papers in Economics 238, Darmstadt University of Technology, Department of Law and Economics.
    3. Mateane, Lebogang, 2020. "Risk preferences, global market conditions and foreign debt: Is there any role for the currency composition of FX reserves?," EconStor Preprints 227484, ZBW - Leibniz Information Centre for Economics.
    4. De Bromhead, Alan & Jordan, David & Kennedy, Francis & Seddon, Jack, 2021. "How does international monetary leadership end? The Sterling Area revisited," QUCEH Working Paper Series 21-02, Queen's University Belfast, Queen's University Centre for Economic History.
    5. Alan de Bromhead & David Jordan & Francis Kennedy & Jack Seddon, 2023. "Sterling's farewell symphony: The end of the Sterling Area revisited," Economic History Review, Economic History Society, vol. 76(2), pages 415-444, May.

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    More about this item

    Keywords

    Currency composition; Foreign exchange reserve; US dollar; Euro; Transaction theory; Reserve Bank of Australia;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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