The data on global reserve accumulation is my great white whale. I suspect I am about the only person who cares that the IMF just released its q3 data on global reserve accumulation.
What is the story? Simple: strong reserve growth and not much evidence of diversification, at least among those countries who report data to the IMF.
Countries that report data on the overall composition of their reserves to the IMF added $162.5b to their reserves in q3. I usually add the non-reserve foreign assets of the Saudi Monetary Agency to that total. SAMA's non-reserve foreign assets increased by $22.5b or so in q3. That brings the global total up to $185b, give or take.
Valuation wasn't much of a factor — the dollar rose marginally against the euro in q3, going from 1.2779 to 1.2687 (based on the St. Louis Fed data series). That reduced the value of the world's existing stock of euros and similar currencies. My rough cut puts those valuation losses at around $9b — implying a valuation adjusted reserve increase of $194b in q3.
Back in November (warning: RGE premium subscription required), Christian Menegatti and I esimated a q3 global increase of around $172b (valuation adjusted) based on the countries we track. We were a bit on the low side. I suspect a lot of the smaller oil exporters added to their reserves at a very rapid clip.
$194b is particularly impressive because Russia made big payments — over $23b in payments — to the Paris Club out of its reserves in q3. Moreover, Chinese reserve growth was relatively low — about $47b — in q3 for reasons that i don't fully understand. The $194b global increase came without the two biggest recent sources of reserve growth firing on all cylinders, so to speak.
The q3 total is higher than my estimates for the valuation-adjusted increase in q1 and q2 ($177b in q1, $168b in q2). $194b is within striking distance of $200b. Indeed, I would be surprised if the q4 total isn't above $200b after adjusting for valuation.
I consequently think it is fair to say that reserves increased at a $800b annual pace in the second half of 2006, with emerging economies accounting for the lion's share of the increase. That would be a record pace for a year — though it doesn't quite match the record quarters generated by Japan's heavy intervention at the end of 2003 and in early 2004.