Central banks rebuilding foreign-exchange reserves at thefastest pace since 2004 are crowding out private investors seekingU.S. dollars, boosting demand even as the Federal Reserve considersprinting more currency.

After falling to an all-time low of 60.5 percent in the secondquarter of last year, the dollar's share of global reserves rose1.6 percentage points to 62.1 percent in December, the latestInternational Monetary Fund figures show. The buying has left theprivate sector with $2 trillion less than it needs, according toinvestment-flow data by Morgan Stanley, which sees the dollargaining 8.2 percent in 2012, the most in seven years.

While the Fed has created more than $2 trillion under itsstimulus programs since 2008, the flows signal that there mayactually be a shortage of dollars to meet demand as Europe's debtcrisis deepens and the global economy slows. The dollar has risen3.5 percent since the end of April against a basket of themost-widely traded currencies even amid speculation that the Fed,which meets this week, may undertake the type of stimulus measuresthat weakened it in the past.