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2 Sep 2015
Era of central banks reserve accumulation: Coming to an end - Deutsche Bank
FXStreet (Delhi) – Analysts at Deutsche Bank, expect that the year 2015 will mark the peak in global FX reserve accumulation, following two decades of 'unremitting growth'.
Key Quotes
“This is due to three cyclical drivers: China’s economic slowdown, impending US monetary tightening, and the collapse in the oil price.”
“Central banks have accumulated 10 trillion USD of assets since the start of the century, heavily concentrated in global fixed income. Less reserve accumulation should put secular upward pressure on both global fixed income yields and the USD.”
“There are counter forces in the opposite direction (eg European current account surpluses and QE) but there is a change in the secular trend. This will require the need for ever looser policy from Western nations to offset this impact.”
Key Quotes
“This is due to three cyclical drivers: China’s economic slowdown, impending US monetary tightening, and the collapse in the oil price.”
“Central banks have accumulated 10 trillion USD of assets since the start of the century, heavily concentrated in global fixed income. Less reserve accumulation should put secular upward pressure on both global fixed income yields and the USD.”
“There are counter forces in the opposite direction (eg European current account surpluses and QE) but there is a change in the secular trend. This will require the need for ever looser policy from Western nations to offset this impact.”