Moving on to developments that are more recent, and with reference to my earlier discussion on diverging monetary policies, the key challenges that reserves managers have been facing since the latter part of 2013 have been around the ongoing uncertainties on the timing of the rise in US interest rates and the negative yields in Europe.
This has required reserves managers to take stock of their SAA as well as review their tactical strategies. For central banks with low reserves, the SAA tends to be set along the currency patterns of their foreign trade and external debt. While debt obligations tend to be dollar based, trade patterns can vary more significantly.