23 central banks hold the Australian dollar

See the latest Australian dollar analysis here:

Macro Afternoon

Missed this earlier from the SMH:

The Reserve Bank of Australia says the dollar is held by as many as 23 central banks from Brasilia to Moscow, documents showed.

The central banks of Brazil, Russia, Germany, Hong Kong, South Korea, Poland, Sweden, and Switzerland are among 15 economies that hold the Australian currency, according to a spreadsheet created in July and other papers released today under a Freedom of Information Act request by Bloomberg News. Among the eight possible holders are Iceland, Indonesia, Jordan, Malaysia and Singapore, they showed.

David Llewellyn-Smith
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  1. If you really want to AUD to come down REDUCE GOVERNMENT DEBT. Less debt means foreign central banks will sell AUD and take their money elsewhere lowering the exchange rate.

    This requires no intervention by the RBA and therefore no risk of foreign exchange losses.

  2. Wouldn’t the dollar be ‘held’ by any country with which we have dealings? There are no volumes attached to the SMH report maybe there are in the original document.
    I realise most trade is in USD but, if you are a trading partner, it would just be sensible to be ‘holding’ some A$.

  3. Capitalist..you are in a complex area. If you have high Govt debt and low interest rates so negative REAL savings you have a CAD.
    If everything was in any way in touch with reality a large Govt deficit would TEND to lower your currency.
    What happens in this convoluted stupidity that passes for economics and policy these days any ridiculous outcome is possible.

    • Wouldn’t say higher government debt and low interest rates means you get a CAD (see Japan).

      However, it is clear that central banks are looking to diversify their holdings away from the Eurozone and the US, which makes Australian government bonds very attractive given our stability and AAA credit rating.

      I’m not saying paying back the debt will result in a lower AUD but it will certainly ease the upward pressure.

      • Yes re Japan I take your point. Bit of chicken and egg as always I guess. Unfortunately we don’t have the careful, prudent and hard-working culture that the Japanese have. So I don’t think we can use Japan as a model for what might happen.
        We don’t save.

        Ah…paying back the debt would TEND to work…maybe I misunderstood what you were saying..but to pay back the debt we have to run a CAS otherwise we are just borrowing more to repay current debt.

  4. Would be great to get volume numbers as well as how much is being held with deposits in the big 4 banks. Would be interesting to see in the event of “australia’s safe haven status” disappearing if our big 4 would be effected in terms of a liquidity issue.