IMF recommends using reserves ‘prudently’ to offset dollar strength

dollars-perspective

Central banks should “prudently” use their FX reserves to defend local currencies against the US dollar’s strength, said Gita Gopinath and Pierre-Olivier Gourinchas in a blogpost published by the IMF on October 14.

The current and former IMF chief economists stressed the dollar has steeply appreciated in 2022. It has risen by 13% against the euro, 22% against the yen and 6% against emerging market currencies.

Considering the US currency’s share in global exports is 40%, a stronger dollar makes

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