Bloomberg News: Central Banks Fret More Over FX 'Weaponization,' UBS Survey Says
Article by Naomi Tajitsu and Jack Ryan in Bloomberg News
The “weaponization” of foreign exchange is posing a growing headache for central bank reserve managers, giving them more reason to boost their holdings of gold.
The share of managers who regard the geopolitical weaponization of FX reserves as an investment risk increased sharply to 49% in 2025 from 32% last year, according to a UBS Group AG survey of nearly 40 central banks completed last month. In 2023, the figure was 14%.
“Geopolitical risk is now very prominent in our survey,” said Philipp Salman, a strategist for central banks at UBS Asset Management, adding that gold has been the big winner as institutions look to hedge against risks posed by conflicts and deteriorating relations between some major economies.
Central bank purchases are a significant driver of a rally that has seen gold prices double since late 2022. The pace of buying picked up after Russia’s foreign currency reserves were frozen, highlighting the appeal of bullion as an asset that is difficult to seize. The trend helped gold overtake the euro as the second-largest asset in central bank reserves, trailing only the dollar.
“Gold is definitely seen as a way to ......