I have gotten out of the habit of checking the New York Fed's data on its custodial holdings for foreign central banks. That is about the narrowest measure of central bank dollar reserves one can imagine -- it leaves out deposits, it leaves out not just London custodial holdings but any securities held by private banks in New York on behalf of foreign central banks and so on. But I did check it today. And the increase in custodial holdings in the fourth quarter of 2006 was quite impressive -- $88.3.Annualized, that is $353b. The pace of increase in the first three quarters (annualized) was a bit over $200b, and the pace of increase in 2005 was about $180b -- so there has been a noticeable surge.
Much as I would like to tell a central bank dollar diversification story, I am not finding it in the data. Indeed, the data suggests that central banks -- notably Asian central banks -- stepped up their financing of the US in q4.