Shifting sands: Navigating the future of the world’s reserve currency
Despite the USD’s entrenched position, recent developments have introduced significant strains
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[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.
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