Dollar falls amid fears central banks diversifying

The US dollar was sharply lower on Tuesday after South Korea re-ignited fears that central banks plan to diversify their foreign exchange reserves away from the greenback to include more currencies.

The Bank of Korea said on Monday that “as foreign exchange reserves increase”, the Bank would “diversify the currencies in which it invests”, as well as targeting higher yielding investments. Seoul has $200bn of foreign exchange reserves, the fourth highest figure in Asia. Some $69bn of this was in US Treasuries as of December.