Here’s a small sample of what the world’s central banks are doing with their newly inflated SDR reserves.
Mexico, via Bloomberg:
The $4 billion in special drawing rights Mexico is getting from the International Monetary Fund is providing the central bank more room to continue selling dollars while reaching its goal of ending this year with international reserves around last year’s levels, said Rafael Camarena, an economist at Banco Santander in Mexico City.
Russia, staying out of the game – via Bloomberg:
Sept. 3 (Bloomberg) — Russia won’t make use of the $8.84 billion worth of the International Monetary Fund’s special drawing rights, Finance Minister Alexei Kudrin said. Russia will use “market means” to fund its budget if it needs to, Kudrin said at a government meeting in Moscow today. Kudrin also said that Russia’s won’t be an IMF “donor.”
Analysis from Reuters:
LONDON, Sept 3 (Reuters) -A worldwide liquidity injection by the International Monetary Fund is already helping smaller emerging economies to support their currencies and improve their credit standing, although it may carry inflation risks.
Brazil, via Bloomberg:
Aug. 27 (Bloomberg) — Brazil’s real rose for the first time this week after the central bank said the country will get $3.9 billion in special drawing rights from the International Monetary Fund, helping to increase its international reserves. The Brazilian currency rose 0.4 percent to 1.8540 per U.S. dollar at 8:52 a.m. New York time, from 1.8620 yesterday.
Ukraine, via NRCU Ukraine radio’s website:
Ukraine to replenish its gold reserves with USD 1.5 billion — The International Monetary Fund (IMF) will officially implement the recently approved general allocation of special drawing rights (SDR) among its 186 members, equivalent to about USD 250 billion, on August 28, according to a statement by Director of the IMF External Relations Department Caroline Atkinson posted on the fund’s official Web site. Ukraine, in line with its quota in the fund, will receive USD 1.589 billion on August 28 and will transfer the funds to its gold forex reserves. On September 9, the IMF is about to implement a one-time allocation of 21.5 billion SDRs, about USD 33 billion, of which Ukraine will receive another USD 456 million.
So mostly, it seems, they’re selling dollars to support their own currencies or buying gold. Interesting.
Related links:
What’s driving paper gold? - FT Alphaville
SDR exchange lift-off – FT Alphaville
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