From NYT:

“Geopolitical factors and U.S. weaponization of the dollar through financial sanctions are causing central banks and other official investors to attempt to diversify away from dollar assets,” said Eswar Prasad, the former head of the International Monetary Fund’s China division.

To see how this fits in with the rise in US interest rates, consider the rate at which Fed debt is rising, relative to that acquired by the official sector (according to Treasury data):

Figure 1: Debt held by Foreign official sector (dark green), foreign non-official (light green), Fed (brown), rest (blue), all as share of US GDP. Source: Treasury via FRED, TIC, and author’s calculations.

Even if the official sector holdings might be understated (see Brad Setser’s $300-$400 bn estimate for China), it’s clear that reserves in Treasurys are not rising proportionately with overall debt held by the public.

What’s the picture from (reported) central bank data (IMF’s COFER). For data through end Q1:

Figure 2: US dollar share of foreign exchange reserves (bold blue), share of foreign exchange reserves controlling for fx valuation effects at 2025Q4 rates (light blue). Controls for valuation using EUR, GBP, JPY echange rates. Source: IMF COFER (vers. June 30, 2026), FRED, and author’s calculations.

While initial figures indicate a slight uptick one month after the US-Iran’s war, this is due in part to exchange rate changes (dollar appreciating). Adjusting for exchange rate valuation changes (not other valuation changes though), the uptick is smaller. What is clear, though, is that the share of FX reserves is down since end-2024Q4.

We will get revised numbers for end-Q1 and initial end-Q2 data at the end of this month.