Is the USD still "king"?

The decreasing trend of the USD proportion in global foreign exchange reserves may soon stop, or even reverse...

After two decades of the dollar's share of global foreign exchange reserves gradually falling below 60%, economic, financial and geopolitical factors are starting to converge to at least temporarily halt this trend for the foreseeable future. in the next few years and may even reverse - according to an article by Reuters news agency.

The rise of the euro and China's rise to the world's second largest economy have weakened the USD's reserve currency status. In addition, the desire to diversify foreign exchange reserves is another factor that may prevent the greenback from ever regaining its former absolute power.

However, according to OMFIF's “Global Public Investor 2024” survey, with the participation of 73 central banks holding foreign exchange reserves totaling $5.4 trillion, there is a net ratio of 18 % of foreign exchange managers said they plan to increase USD reserves in the next 12-24 months. This is two and a half times higher than the number giving the same answer for the second-placed currency, the euro.

Besides, cyclical factors are increasingly favoring the USD, including relatively high economic growth and profit margins in the US compared to other developed economies, and This trend is likely to maintain in the next 2 years.