IMF reserve plan seen anchoring Aussie, Canada dollars

Thu Dec 6, 2012 4:58am EST
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* Canada, Aussie dollars to benefit from diversification

* Strong correlation with stocks could wane

* Central bank buying to check swings in these currencies

By Anirban Nag

LONDON, Dec 6 (Reuters) - An IMF plan to list the Australian and Canadian dollars as reserve currencies could curb swings in their exchange rates and enhance their appeal relative to troubled rivals such as the dollar, yen and euro.

Raising the status among central bank reserves of the two growth-linked dollars could weaken their strong correlation with stocks and commodities, which has seen the currencies sell off sharply when worries about global economic health escalate.

In considering adding the Australian and Canadian currencies to a list that includes the U.S. dollar, euro, yen, sterling and Swiss franc, the International Monetary Fund is unlikely to trigger a rush to buy and is largely recognising reality.

Asian, Middle Eastern and European central banks, with trillions of dollars in reserves, have been steadily paring exposure to the dollar and yen in recent months and increasing holdings in the Aussie and Canadian currencies.

The risk of further monetary easing in the United States and Japan have somewhat tarnished the appeal of the dollar and the yen, while a three-year-old sovereign debt crisis has made investors wary of the euro.   Continued...