09:06 AM EDT, 06/11/2024 (MT Newswires) -- The US dollar's share in foreign reserves of central banks and governments is gradually declining despite the greenback's higher valuation, the IMF said in a blog post on Tuesday.

The decline, however, has not been matched by increases in the shares of the euro, Japanese yen, or British pound sterling, but rather by "nontraditional" reserve currencies such as the Australian dollar, Canadian dollar, Chinese renminbi, South Korean won, Singaporean dollar, and Nordic currencies, according to the blog post written by Serkan Arslanalp, Barry Eichengreen , Chima Simpson-Bell.

The conclusion is based on recent data from the IMF's Currency Composition of Official Foreign Exchange Reserves, or COFER, which surveys 149 reporting economies that make up as much as 93% of global FX reserves.

"Taking a longer view, over the last two decades, the fact that the value of the US dollar has been broadly unchanged, while the US dollar's share of global reserves has declined, indicates that central banks have indeed been shifting gradually away from the dollar," the IMF staffers wrote.

Statistical tests don't suggest an accelerating decline in the dollar's share in global FX reserves despite certain claims that financial sanctions imposed by the US have accelerated the movement away from the dollar, they said.

The report said reserve managers find nontraditional currencies increasingly attractive due to their diversification benefits and relatively high yields, and also because "they have become increasingly easy to buy, sell and hold" through new digital financial technologies including automatic market-making and automated liquidity management systems.

China's renminbi is one of the nontraditional reserve currencies that have gained market share, helped by Beijing's policies supporting cross-border payment system, the extension of swap lines, and piloting a central bank digital currency aimed at renminbi internationalization.

Despite these efforts, however, the renminbi's share of global reserves has stalled, and recent data even show a decline since 2022 even when adjusting for exchange rate changes.