Apr 21, 2022 5:49 p.m
Israel’s central bank has announced it will diversify the country’s foreign exchange reserves, including for the first time the Chinese yuan alongside two other currencies. At the same time, the shares of US dollars and euros are to be reduced.
The Central Bank of Israel has the internationally traded Chinese yuan (Renminbi) included in their currency reserves for the first time ever. In addition to the Chinese currency, the agency also wants to include the Canadian and Australian dollars as Israel wants to diversify its currency reserves and “broaden its investment horizon”. At the same time, the central bank declared that it wanted to reduce the shares of US dollars and euros.
Bank of Israel Deputy Governor Andrew Abir said in an interview with US newspaper Bloomberg:
“We need to see if we can get a return on the reserves that will cover the cost of liability.”
So far, the Israel Central Bank has only held US dollars, euros and pounds sterling. Last year, the country’s foreign exchange reserves surpassed the equivalent of $200 billion for the first time, equivalent to a third of Israel’s annual gross domestic product. As a result of the restructuring, the share of the euro has now fallen from 30 percent to 20 percent, and the share of the US dollar has been reduced from 66.5 percent to 61 percent.
The yuan will initially make up 2 percent of the stock, while the Canadian and Australian currencies will each account for 3.5 percent. The share of the British pound will therefore double to 5 percent and thus return to a level last reached in 2011.