Israel adds Chinese RMB to Central Bank reserves for first time, cuts USD holdingsAustin Roe
From the Jerusalem Post:
The Bank of Israel has added four new currencies, including the Chinese yuan, or renminbi, to its holdings for the first time in the country’s history, Bloomberg reported last week. The central bank will also trim US dollar and euro holdings in a bid to diversify its foreign reserves, the report said.
Israel’s foreign-currency reserves, which last year exceeded $200 billion for the first time, have traditionally been made up of dollars, euros and British pounds. Israel will now include Canadian dollars and Australian dollars in its foreign-currency reserves, as well as the Japanese yen and the Chinese renminbi.
The reshuffle was a change in Israel’s “whole investment guidelines and philosophy,” Bank of Israel Deputy Governor Andrew Abir said, adding that the rise in Israel’s foreign-exchange reserves forced the central bank to consider “the need to earn a return on the reserves that will cover the costs of liability.”
The central bank, which as recently as 2020 held 67.4% of its foreign exchange in US dollars, 30.1% in euros and 2.5% in British pounds, now plans to have the pound and yen account for 5% each. The yuan will account for 2% of its holdings, while the currencies of Canada and Australia will each be 3.5%.
A reduction in US dollar and euro holdings is planned to make room for the new reserves being held. US dollar holdings will go from 66.5% in 2021 to 61%, down about 8.3%, while euro holdings will be reduced from 30.8% to 20%, down 35%.
Photo caption: CHINESE PRESIDENT Xi Jinping and Prime Minister Benjamin Netanyahu shake hands in Beijing in 2017. Navon’s book addresses Israel’s complex relations in Asia and elsewhere (credit: ETIENNE OLIVEAU/POOL/REUTERS)