EM central bank diversification selling of USD
Reserve growth is a function of the US C/A & capital inflows to EM AND contingent on a policy decision to intervene
Capital flows are a function of deviation from benchmark and growth in AUM
EUR-USD up threshold is around $25bn pcm. This requires reserve accumulation of around $75bn pcm.
This would become difficult to achieve as US trade gap converges on $20bn per month and investor appetite for EM becomes satiated.
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