Global Reserve Managers Shift to US Dollar Amid Market Volatility

BREAKING: Standard Chartered has revealed that global reserve managers are adopting a countercyclical strategy with the US dollar, buying when the currency weakens and selling during rallies. This development underscores a shifting approach in how these managers navigate market fluctuations amidst ongoing volatility.

In a recent report, Standard Chartered highlighted that in 17 of the past 20 quarters, dollar reserves have moved inversely to the Bloomberg Dollar Index. This pattern suggests that official managers are using currency fluctuations to rebalance their portfolios rather than reinforcing prevailing market trends.

The second quarter of 2025 saw this trend particularly pronounced, as central banks strategically avoided adding to selling pressure on the dollar. In contrast, during the fourth quarter of 2024, when the dollar surged by 7.1%, reserves plummeted by $154 billion as managers capitalized on the strength of the currency, taking profits.

Standard Chartered noted that this countercyclical behavior reflects a combination of “caution, opportunism, and size,” emphasizing that official institutions continue to play a vital role in stabilizing global currency markets. These actions not only impact investment strategies but also have far-reaching implications for global economic stability.

As the situation develops, market observers will closely monitor how these reserve managers adjust their strategies in response to ongoing shifts in the currency landscape. The balance they strike between risk and opportunity will be crucial in shaping market dynamics in the months ahead.

Stay tuned for the latest updates on this evolving situation as it unfolds.