The Currency Composition of Foreign Exchange Reserves

49 Pages Posted: 15 Feb 2006

See all articles by Jose Saul Lizondo

Jose Saul Lizondo

affiliation not provided to SSRN

Donald J. Mathieson

International Monetary Fund (IMF)

Date Written: July 12, 1988

Abstract

This study examines the determinants of the currency composition of foreign exchange reserves for both industrial and developing countries. During the period from 1976-85, our empirical results indicate that the currency composition of reserves has been influenced by each country`s exchange rate arrangements, its trade flows with reserve currency countries, and the currency of denomination of its debt-service payments. The evidence is consistent with the view that managing the currency composition of a country`s net foreign asset position is done more cheaply by altering the currency of denomination of assets and liabilities that are not held as reserve assets.

JEL Classification: 4310, 4314, 4320

Suggested Citation

Lizondo, Jose Saul and Mathieson, Donald J., The Currency Composition of Foreign Exchange Reserves (July 12, 1988). IMF Working Paper No. 88/61, Available at SSRN: https://ssrn.com/abstract=884885

Jose Saul Lizondo

affiliation not provided to SSRN

No Address Available

Donald J. Mathieson

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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