Standard Chartered say global reserve managers are trading the US dollar countercyclically

Standard Chartered says reserve managers are buying the US dollar when it weakens and selling on rallies.

• Dollar reserves and Bloomberg Dollar Index have moved opposite in 17 of 20 quarters, per IMF data.

• In Q2 2025, reserves rose as the dollar fell; in Q4 2024, reserves fell as the dollar rallied.

• The behaviour reflects cautious and opportunistic management by central banks.

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Global reserve managers appear to be taking a countercyclical approach to the U.S. dollar, buying when it weakens and trimming holdings when it strengthens, according to Standard Chartered.

In a note citing IMF data, StahChart said dollar reserves and the Bloomberg Dollar Index have moved in opposite directions in 17 of the past 20 quarters, suggesting that official managers use currency swings to rebalance portfolios rather than reinforce market trends.

Pointed to the second quarter of 2025,

• the dollar fell 6.6%
• but official reserves rose by $50 billion

likely because central banks avoided adding to selling pressure. Conversely, in the fourth quarter of 2024, when the dollar gained 7.1%, reserves dropped by $154 billion as managers took profits on strength.

StanChart said the pattern reflects a mix of “caution, opportunism, and size”, noting that official institutions remain important stabilising forces in global currency markets.

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