Reserve managers plan to add euros short and longterm OMFIF
Positive rates boosting euro appeal
Euro also benefits from dedollarisation

LONDON, March 6 Reuters Once hurt by crises and deflation, the euro is gaining popularity among central bank reserve managers thanks to a return to positive rates and geopolitics challenging king dollar39;s appeal.

Roughly one in five of the 75 central banks surveyed by the Londonbased OMFIF thinktank anticipate increasing euro holdings over the next two years, its recently published 2023 report showed.

While 7 looked to decrease euro holdings, net demand was higher than for any other currency during the period and a jump from the 2021 and 2022 surveys of reserve managers controlling nearly 5 trillion.

Shifts can take years to play out. The dollar, which makes up 60 of global reserves versus the euro39;s 20, will not lose its crown overnight.

Yet, a more positive euro outlook speaks to notable changes taking place.

For starters, the European Central Bank39;s exit from negative interest rates in 2022 drove euro area government bond yields higher after almost a decade below 0, and they should remain elevated even as rate cuts near.

Germany39;s 10year Bund yield has stayed above 1.9 since late 2022.

Now the euro is positive yielding, reserve managers are looking to increase their currency allocation to the euro and specifically away from the dollar, said Taylor Pearce, OMFIF senior economist.

For some central banks, because the…