The most authoritative source of information about the currency allocation of foreign exchange reserves, the International Monetary Fund's COFER data, was just released for the fourth quarter of 2009.

As we've suggested, based on the dollar's appreciation, the greenback's share of reserves increased. In the fourth quarter the dollar's share of allocated reserves rose to 62.1% from 61.5%. The euro's share slipped to 27.4% from 27.8%.

The yen's share slipped to 3% from 3.2% and sterling's share was steady at 4.3%. The catch-all category of other currencies rose to 3.1% from 3%. This includes Canadian dollars and Australian dollars as well as a host of other currencies that are used on the margins like the Norwegian kroner.

Valuation often seems to explain the bulk of the volatility in the currency allocations. However, dollar holdings actually increased by about $109 billion in the fourth quarter after a $51 billion increase in the third quarter and a $40 billion increase in the second quarter. In the first quarter of 2009, dollar holdings had slipped by about $62 billion.

Given the euro's decline of almost 5.7% against the dollar in the first quarter of 2010 and the 6.3% decline of sterling, and with the yen flat, it seems likely that the dollar's share of reserves likely rose in the first quarter as well.

The euro fell about 2% in the fourth quarter so the fact that the dollar value of euro reserves rose by $19 billion it suggests that euros were added to reserves too.

On the other hand, the yen fell about 3.5% against the dollar and the dollar value of yen reserves fell by $6 billion, likely reflecting valuation adjustment. Sterling rose 1.2% in the fourth quarter of 2009, and the dollar value of sterling reserves rose by about $3.5 billion. This too looks mostly like valuation adjustments.

Taking a step back, the dollar value overall of reserves rose to $8.08 trillion. Only 56.5% of the reserves are known by currency allocation. Unallocated reserves rose by about $77 billion in the fourth quarter. China, of course, accounts for the bulk of the unreported, but don't forget Taiwan isn't a member of the IMF and so its reserves aren't allocated either.

Marc Chandler has been covering the global capital markets in one fashion or another for nearly 20 years, working at economic consulting firms and global investment banks. Currently, he is the chief foreign exchange strategist at Brown Brothers Harriman. Recently, Chandler was the chief currency strategist for HSBC Bank USA. He is a prolific writer and speaker and appears regularly on CNBC. In addition to being quoted in the financial press, Chandler is often a guest writer for the Financial Times. He also teaches at New York University, where he is an associate professor in the School of Continuing and Professional Studies. While Chandler cannot provide investment advice or recommendations, he appreciates your feedback; click here to send him an email.

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