Central Bank EUR Reserves PlungeJanuary 09, 2015
IMF data released earlier this week revealed the largest ever quarterly decline in reserves held in euros. The more than 8% QoQ drop in holdings of the euro area’s common currency easily surpassed the 6% fall back in 3Q2008 and coincides with one of the more severe quarterly falls in the EURUSD exchange rate that we have seen in some time.
Simply put: central banks (presumably a non-trivial source of support) are turning down the opportunity to purchase the euro at significantly cheaper prices. So, where to from here?