EGB SYNDICATION: Lithuania Long 7-year Nov-33 LITHUN: Allocations

Risk positive moves doing the rounds on unverified/unsourced tweets noting that "IRAN IS WILLING TO CONTINUE DISCUSSIONS WITH THE US, SAYS ENVOY."

TREAT WITH CAUTION. We have not seen this on traditional news wires.

That headline seemingly stemming from TheHindu.com, who runs an interview with Envoy to India:

• "Iran is open to peace talks with the U.S. if unlawful demands are avoided, says Envoy Mohammad Fathali"
• Paywalled link is here: https://www.thehindu.com/news/international/iran-envoy-to-india-mohammad-fathali-press-conference/article70857551.ece

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(MNI) London – All timings are subject to change. 

Monday 13 April:

• US-Iran: US President Donald Trump has confirmed that a ‘blockade’ of Iranian ships entering or exiting Iranian ports via the Straits of Hormuz will begin at 10:00ET (15:00BST, 16:00CET). This comes after marathon negotiations between the US and Iranian delegations held in Islamabad, Pakistan, over the weekend failed to reach an agreement. Lead US negotiator Vice President JD Vance said the US needs a commitment from Iran that it would not pursue the development of nuclear weapons, claiming “we haven’t seen that yet.” The continued closure of the Straits risks a sustained spike in global oil prices, while geopolitical uncertainty remains over what actions the US will take to implement its blockade (i.e. will it fire on vessels seeking to transit).

IMF COFER data for Q4 was released at the end of March. The USD share of FX reserves was 56.8%, essentially unchanged from 56.9% in Q3. On a longer-term view, this compares to 58.5% in Q4 2024 and 61.3% in Q4 2019. Once again, portfolio valuation effects look to have prevented a larger fall in the USD’s share of total reserves. Overall, slow and steady reserve manager diversification out of the USD has been observed for some years now, and this has been reflected in higher “unallocated” FX reserve shares and (outside of the COFER dataset) increased gold holdings.

• The key focus in H1 2026 will be (i) how aggregate FX reserve levels change (with some EM countries potentially needing to release reserves to respond to local FX pressures) and (ii) the magnitude of “flight to safety” flows back to the dollar (DXY rose ~2.75% through Feb/March).
• We estimate “actual” net FX reserve flows using basic portfolio allocation assumptions and exchange rate changes. See the table below for adjusted flows in USD, EUR, JPY and GBP.
• We estimate that the 0.5% Q/Q rise in USD reserves (to $7.458trln) in Q4 represented a 1.4% increase in portfolio valuations, offset by a 0.9% decrease in actual USD reserve holdings.
• The USD value of total reserves rose by ~$107bln to $13.137trln in Q4, with USD, EUR, JPY and GBP reserves rising ~$46bln to $11.46trln. Considering these four currencies only, we estimate a portfolio valuation and FX adjusted net flow of minus $71bln (portfolio valuations increased $158bln, offset by $41bln of FX adjustments).
• The IMF’s IFS dataset suggests gold was ~25% of global reserves as of Q4 2025, up significantly from ~10% in 2017. However, some countries (e.g. Turkey) have been selling down gold holdings to finance domestic FX intervention since the Iran war started.