Carl Weinberg, the chief economist at High Frequency Economics, a research shop that focuses on the Group of Seven countries, China and Australia, kicked off his first research note of 2011 by suggesting a candidate for most hyped story of 2010: the notion that central banks are diversifying their reserves away from the U.S. dollar.

"If there was a single recurring theme amongst teenaged scribblers in the currency markets last year, it was that central banks were selling U.S. dollars to hedge the risk of dollar depreciation," Mr. Weinberg writes. "IMF data, updated last week, show that fear to be baseless."

The data Mr. Weinberg is talking about is the I nternational Monetary Fund's Currency Composition of Official Foreign Exchange Reserves, or COFER, which the fund publishes quarterly.

The data aren't perfect. The report captures the foreign reserve holdings of 140 countries or other "entities" that maintain reserves. Some countries, including China, the world's largest holder of reserves, don't provide breakdowns on their holdings.

In the third quarter, 61.3 per cent of the reserves of reporting central banks were constituted in dollars, little changed from the same period a year earlier, according to Mr. Weinberg's calculations. Over the last five reported quarters, the share of U.S. dollars has varied between 61.3 per cent and 62.2 per cent.

"Traders and investors who sold dollars in 2010 because they thought central banks were dumping them need to think again," Mr. Weinberg writes. "Central banks are not hedge funds. They are not motivated by profits to reallocate FX holdings to maximize the value of their reserves."

The latest IMF reserve data also are a blow to those who predict the euro's ascent to the status of primary reserve currency. In the third quarter, the euro represented 26.9 per cent of reported central bank holdings. The share of the major European currencies that the IMF measured at the end of 1995: 27 per cent.

"As a reserve currency, the euro is making no progress whatsoever."