Tag Archives: International trade

Update on US Dollar as Global Reserve Currency and the Impact of USD Exchange Rates & Inflation, by Wolf Richter

The dollar has been losing market share of international trade for years and that may continue. However, keep telling the world that dollar reserves  are no longer safe and the decline may be dramatic and sudden. From Wolf Richter at wolfstreet.com:

Dollar drops to lowest share in 26 years. Slowly but surely?

With inflation raging in the US following the Fed’s $5-trillion money-printing orgy and interest-rate repression, the question constantly arises: When will the rest of the world throw in the towel on the dollar as the dominant global reserve currency? If this were to happen all of a sudden, it would spell chaos. But it is happening little by little.

The global share of US-dollar-denominated foreign exchange reserves fell by 40 basis points from Q3 to 58.8% in Q4, setting a new 26-year low, edging out the low in Q4 2020, according to the IMF’s COFER data released at the end of March. Dollar-denominated foreign exchange reserves consist of Treasury securities, US corporate bonds, US mortgage-backed securities, and other USD-denominated assets that are held by foreign central banks and other foreign official institutions.

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