Euro Loses Pillar of Support vs Dollar as Central Banks’ FX Reserve Growth Slows

FX WATCH COMMENTARY BY Da vid Powell, Bloomberg Economist

The sharp slowdown in the accumulation of foreign-exchange reserves by the
People’s Bank of China has removed a pillar of support from the euro versus the
U.S. dollar.

The Chinese central bank reported over the weekend its holdings of foreign currencies
rose to $3.29 trillion in September from $3.24 trillion in June. The monetary
authorities refrained from releasing a monthly breakdown this quarter. The $50
billion increase equates to about $28 billion in fresh reserve accumulation after
the data is adjusted for valuation effects, according to Bloomberg Brief estimates.

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