Israel Adds 4 New Currencies to its Forex Holdings While Decreasing Reserves Held in Dollars and Euros

Addis Ababa, Ethiopia (26 April 2022)

Starting from 2022, Israel is to add the Canadian and Australian dollar, the Japanese yen, and the Chinese Yuan to its foreign exchange reserves, the Deputy Governor of the Bank of Israel announced.

Only three currencies were held previously by Israel, namely the US dollar, the British pound, and euros. In order to accommodate the new additions, the share of the USD and euro in the reserve will decline from 66.5% to 61% and from 30% to 20%, respectively, whilst the pound sterling will nearly double to 5%. On the other hand, the bank’s annual disclosed that the yuan will account for 2% of the bank’s reserves, the yen for 5%, while the Canadian and Australian currencies will account for 3.5% each. The yuan’s inclusion has prompted much conversation in the international community, as the US dollar’s share of total global currency reserves has fallen to its lowest level since 1995, according to the IMF. China has also long advocated for the yuan to take the place of the dollar as the primary reserve currency.

Bloomberg reported that Israel’s action was taken to diversify resource allocation and lengthen the Bank’s investment horizon. The economist Aleksandar Tomic, however, previously told Insider that it is a move to reduce exposure to the US dollar, and that other countries may soon follow after seeing the effectiveness of the West’s sanction against Russia.