At Any Rate Macro Corporate Spotlight - De-dollarization: Fact and fable
Jun 10, 2025
Meera Chandan, Co-Head of FX Strategy at J.P. Morgan, dives into the transactional side of the dollar, while Saad Siddiqui analyzes dollarization trends in emerging markets. Jay Barry discusses the decreasing foreign ownership of U.S. Treasuries, revealing shifts in global investment patterns. Meanwhile, Greg Shearer highlights the structural changes in commodity transactions as de-dollarization unfolds, particularly in energy markets. These insights paint a compelling picture of the evolving role of the dollar in today's global economy.
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US Dollar's Transactional Dominance Intact
- The transactional dominance of the US dollar remains strong despite the US share in global trade falling.
- Dollar accounts for 88% of FX transactions, far ahead of the euro's 31%; the yuan has seen small growth to 7%.
Dollar Decline Masked by Gold Demand
- The dollar's share in global FX reserves has steadily declined over 20 years, from 70% to just under 60%.
- Central banks' increased gold holdings suggest an adjusted dollar share closer to 50%, showing a gold-driven diversification trend.
EM Exposure to Dollar Increasing
- Emerging markets' FX reserves have become a smaller portion of total foreign assets, with sovereign wealth funds and private investors increasing dollar exposure.
- This shift means EM exposure to the US dollar is currently at historic highs, not declining.