Why would Asian central banks suddenly be selling euros?

Author: Jamie Coleman | Category: News

Because the dollar is flying against a range of Asian currencies. Instead of buying dollars, as the traditionally do day after day to keep their local currencies competitive, Asian central banks are now selling dollars into rallies and buying their local currencies.

Until now, they have been diversifying a certain percentage of their dollar reserves into euros buy buying EUR/USD. Now, the process is reversed.

From a steady buyer of EUR/USD on dips, Asian central banks are now sellers on rallies.

That’s a very major shift in the flows, and a negative for the euro.

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