04 Jun 2026 12:33 UTC
The rise and rise of the IMF’s mysterious ‘other’ reserve currencies
➤ This trend indicates a diversification strategy by central banks, moving away from traditional reserve currencies like the US dollar and euro, with smaller, regionally significant currencies gaining traction due to factors like market liquidity and stability.
➤ While the IMF does not disclose the specific currencies within this 'other' category, research suggests the Singapore dollar is a primary driver of this growth, followed by currencies like the South Korean won and Norwegian krone.
➤ Central banks are increasingly allocating a significant portion of their foreign exchange reserves to 'other currencies,' a category that has grown substantially and now surpasses the Japanese yen and sterling in value.
Central bank reserves are back in the news this week, with the ECB now reckoning that gold is a bigger deal than US Treasuries for the first time in ages. However, this is actually largely a product of gold prices soaring thanks to a big buying spree by central banks (and Tether).
As Alphaville has previously highlighted, the really intriguing trend in central bank reserve management is the remarkable rise in the reported holdings of “other currencies” — in other words, those too small to normally warrant their own category.
As the IMF’s last Currency Composition of Official Foreign Exchange Reserves report revealed in March, “other currencies” now account for 6.13 per cent of the $13.1tn of reserves accumulated by central banks around the world. In other words, a cool $805bn.
That now makes the mysterious category bigger than the Japanese yen, having already leapfrogged sterling back in 2024. It is now comfortably the biggest allocation after the dollar and the euro.
We dug into the IMF’s COFER database to show how the “other currencies” category has soared, even as many other supposed dollar rivals — like the renminbi — continue to tread water.
So what exactly is in “other”, and which currency is driving the increase?
The IMF won’t say; after all, these are just anonymised numbers reported by central banks to the Fund. It might not even know.
Steven Englander, head of FX strategy at Standard Chartered, having tried to reverse-engineer it by looking at correlations between currency movements and reported shares, has previously said that the Norwegian krone was probably the biggest component. But this feels unconvincing.
Not that Norway isn’t of unimpeachable creditworthiness. It is, of course! The problem is that Norway hardly issues any debt, and the liquidity of what it does issue is dismal. For central banks, that is a big problem. Norges Bank’s own data doesn’t indicate a lot of overseas buying either.
Reserve managers could be buying high-grade bonds issued by Norwegian municipalities and covered bonds issued by banks, but the Norwegian krone has been extremely weak for a while. This strongly suggests that there’s no wall of central bank money washing into the country in recent years.
Remember, in dollar terms, the increase in “other currencies” from the start of 2020 to today amounts to roughly $550bn. That’s not all going into Sparebank1 Sogn og Fjordane.
However, courtesy of Erik Nelson, Wells Fargo’s global head of FX strategy, we have a new contender. Take it away, Erik:
» Over the last two decades, the US dollar’s share of global foreign exchange reserves has steadily declined. Yet, this has not been a function of the dollar being “replaced” by another large reserve currency, such as EUR, CNY or JPY. If anything, the EUR share is on the low side versus history, and CNY’s initial market share increase in the late 2010s has fizzled out. Instead, the excitingly named “other” category has shown far and away the largest growth in recent years, with smaller and regionally significant currencies gaining traction as central banks diversify their exposures. Data on the breakdown of “other” reserve currencies are not publicly available from the IMF’s Composition of Foreign Exchange Reserves (COFER) data, but we can back into an estimate using the IMF’s CPIS data, consistent with research from Arslanalp, Eichengreen, and Simpson-Bell. [ . . . ] In the last decade or so, the Singapore dollar (SGD) is a clear standout as an increasingly large component of official FX reserve portfolios and now the single largest currency within the “other” category based on our proxy estimates.
Interesting!
Like the Norwegian krone, the Singaporean dollar makes a lot of sense from a safety perspective. Singapore also runs consistently big budget surpluses and boasts several sovereign wealth funds — one of which is possibly the biggest in the world.
The Singaporean dollar has also been steadily appreciating over the past decade, which isn’t the main point of central bank reserve allocators but is a nice bonus (plus it indicates inflows).
Singapore is also an important financial hub for the region, which typically also helps burnish the lustre of a reserve asset. But the biggest factor is the fact that there are lots of Singapore bonds to buy.
Not necessarily “normal” government bonds, as Singapore — like Norway — mostly just issues bonds for the sake of maintaining a sovereign debt market. But it does so with greater seriousness and scale than Norway. As a result, Singapore has one of the highest gross debt-to-GDP ratios in the world, even if all its assets mean that its net debt is negative.
And indeed, Wells Fargo’s biggest estimated jumps in the Singapore dollar’s reserve share — in 2021 and 2024 — line up nicely with almost $15bn of Singaporean green bond issuance in each of those years.
Another bit of anecdotal evidence for Singapore catching a hefty central bank reserve bid in recent years is the fact that its government bonds have been FAR better behaved than those of other markets lately. In fact, Singapore’s 10-year yield is now below Japan’s.
Of course, that’s not to say that the Singapore dollar represents all of the IMF’s “other currencies” basket.
Alphaville suspects that the South Korean won is another big winner, even if Wells Fargo’s FX analysts reckon it is now a smaller component in this category than the Sing dollar. The Swedish and Norwegian krone are probably receiving at least some foreign central bank buying, as is the Kiwi dollar.
But the Singaporean dollar does feel like a solid answer to those wondering where central banks are now ploughing their money.
Categories rationale: The article discusses the growing importance of 'other currencies' in central bank reserves, which are essentially smaller, less traditional financial instruments. The focus on Singapore and Norway highlights emerging hubs where these currencies are gaining traction.Characteristics justification: The article discusses a trend that is not widely reported ('mysterious 'other' reserve currencies'), indicating a degree of novelty (entropy). While not overtly negative, the uncertainty surrounding the composition of these reserves and the potential implications for traditional reserve currencies lend a slightly uncertain tone. The discussion of central bank diversification and the growing allocation to 'other currencies' suggests a shift in market dynamics, making the information relevant.Tag relevance: The selected tags capture the core themes: the central banks' reserve management, the mysterious 'other currencies' category, the IMF's role in reporting, the key currencies identified (Singapore dollar, Norwegian krone), the strategic aspect of FX strategy and diversification, and the underlying asset class of sovereign debt.asset-types: others
rwa: false
entropy: 0.75
sentiment: 0.3
staleness: 0.4
relevance: 0.8
uncertainty: 0.6RWATimes slug: ft-the-rise-and-rise-of-the-im-fs-mysterious-other-reserve-currencies-1561826719