COFER Explained: What Reserve Currency Shares Reveal and Hide

[Shadow Trader]

The International Monetary Fund publishes the Currency Composition of Official Foreign Exchange Reserves, known as COFER, a quarterly survey showing how central banks hold their reserves. The American dollar has long held the largest share, followed by the euro, with the yen, sterling and others well behind.

One detail often overlooked is valuation. Reported shares are measured in dollar terms, so a sharp dollar rally mechanically lowers the share of other currencies even if no central bank sold anything. Moves in the data therefore mix genuine portfolio decisions with exchange rate effects.

Another limitation is that some reserve holders do not report the currency breakdown, so the total is incomplete. Gold is also outside the currency breakdown, which matters because several central banks have been adding bullion in recent years.

For scalpers, COFER is not a trading trigger. Releases are slow, backward looking and rarely move price within a session. Its value is context: it explains why large, steady flows into or out of reserve assets can shape the background trend of major pairs, and why headlines about de-dollarisation deserve careful reading against the actual composition data.