© Reuters. FILE PHOTO: A view of Brazil’s Central Financial institution in Brasilia, Brazil, September 15, 2016. Image taken September 15, 2016. REUTERS/Adriano Machado
By Marcela Ayres
BRASILIA (Reuters) – Brazil’s central financial institution greater than quadrupled its international reserves in final yr, policymakers reported on Thursday, because it trimmed holdings of U.S. {dollars} and euros and constructed Brazilian reserves of foreign money from its largest commerce associate.
The Chinese language foreign money, which till 2018 was absent from the foreign exchange reserves of Latin America’s largest financial system, rose to 4.99% of Brazilian central financial institution holdings on the finish of final yr, from 1.21% on the finish of 2020.
That gave it the third largest share of the central financial institution’s reserves, barely behind the euro, which fell to five.04% final yr from 7.85% in 2020. Greenback reserves fell to 80.34% of the overall from 86.03% a yr earlier.
The shift underscores China’s rising financial significance to Brazil, the place it represents 28% of worldwide commerce, greater than twice america, its subsequent largest commerce associate, World Financial institution knowledge exhibits.
Brazil additionally elevated the publicity of its reserves to different currencies – together with the Japanese yen, British pound, Canadian greenback, Australian greenback – and gold, typically used as a hedge towards different monetary belongings.
“In 2021, we sought larger diversification within the allocation of currencies, with out prejudice to the countercyclical profile of the portfolio as a complete,” mentioned the central financial institution within the annual report on its international reserves.
Whole reserves rose by $6.58 billion final yr to $362.2 billion. Portfolio returns have been down 0.62%, the worst efficiency since 2015, primarily because of the energy of the U.S. greenback towards different currencies within the portfolio.
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