Shifting sands: Navigating the future of the world’s reserve currency

[SINGAPORE] For over three-quarters of a century, the US dollar (USD) has stood as the world’s principal reserve currency, following the US-led global order after World War II.

Its enduring preeminence, demonstrated by a dominant share of about 59 to 60 per cent of global foreign exchange (FX) reserves, has conferred unique advantages on the US – from lower borrowing costs to having a potent instrument of foreign policy through financial sanctions.

However, history shows that no currency’s dominance is eternal. Recent geopolitical shifts and evolving national policies now prompt a critical examination of the USD’s long-term trajectory and its profound implications for investors worldwide.