A Microcosm Of Diversification

This morning as I was flipping on CNBC Rick Santelli mentioned something about the Riksbank in Sweden diversifying some of its dollar reserves into euros and Norwegian kronas. This lifted the euro from about 1.2280 up to 1.2328 which is a noticeable move for a currency in just a few hours. The Riksbank now has 50% of its reserves in euros, 20% in dollars (down from 37%), 10% in sterling and the Norwegian krona (the krona was previously zero) and 5% in the Aussie. The article where I found the numbers also said that 6% is in yen which adds up to 101%.

I don't think the exact numbers are the big thing. Sweden, a small country, reduced dollar exposure and there will be other countries that do the same. I have been writing about this for many months. The reaction in the currency market is noticeable. This noticeable move will not hurt anyone. As some point when a bigger country does this it may cause some discomfort but I don't think it will cause rioting in the streets as some people believe.

I may not have found this bit of news had I not flipped on CNBC. I bash on CNBC as do a lot of folks but this is why I watch it, it saves me the time of having to find more news items.

*****Possible Correction******
Marc Chandler on Real Money said the yen weight is now zero.