Israel adds Chinese yuan to reserves
The central bank of Israel said it is diversifying the country’s foreign exchange holdings by adding the Chinese yuan alongside three other currencies, while slashing the share of the dollar and the euro.
In addition to the yuan, the regulator said it will also add the Canadian and Australian dollars as Israel is seeking to diversify the reserve allocations and “lengthen its investment horizon.”
“We need to look at the need to earn a return on the reserves that will cover the costs of the liability,” Deputy Governor of the Bank of Israel, Andrew Abir, said in an interview with Bloomberg.
The Bank of Israel had previously held only US dollars, euros, and the British pound. Last year, the country’s forex reserves exceeded $200 billion for the first time ever, accounting for a third of Israel’s gross domestic product.
The reshuffle means the euro’s share will fall from 30% to 20%, and the dollar will account for 61%, down from 66.5%.
The yuan will now make up 2% of the holdings, while the Canadian and Australian currencies will have 3.5% each. The share of the British pound will double to 5%, returning to a level last seen in 2011.
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