New York Fed analysis suggests the decline in the dollar's reserve share is concentrated among specific nations, challenging the narrative of a universal global de-dollarization trend.
The New York Fed research indicates that the decline in the dollar's reserve share is not a broad-based global exit, but rather concentrated among a few large holders like China and Russia. Furthermore, much of the headline volatility in the dollar's share is driven by exchange-rate valuation effects rather than active selling.
While its share has declined to 56%, the drop is largely attributed to a few specific countries and exchange-rate movements rather than a universal abandonment.
The US dollar's share of global foreign exchange reserves has dropped to approximately 56%, a three-decade low. New York Fed research indicates this decline is driven by a small group of large reserve holders rather than a broad-based global exit, while currency valuation effects often exaggerate the perceived shift.
Evidence suggests the trend is overstated. While some nations like China and Russia are reducing exposure, the decline is not a universal movement and is often exaggerated by currency valuation effects.