The weight of the dollar in international reserves has been decreasing in recent years

While the US dollar has long maintained its central role in the global financial system, its share in total reserves continues to decline as countries seek to diversify their reserve compositions. According to the International Monetary Fund’s (IMF) Currency Composition of Official Foreign Exchange Reserves (COFER), total global reserves reached 13 trillion dollars as of the third quarter of 2025. During this period, the dollar's share in reserves was recorded at 56.92%.

The share of the US dollar was 58.51% in the first quarter of last year and 57.08% in the second quarter. At the beginning of 1999, this rate was 71.19%; a significant decline has been observed since that day.

Looking at developments in other major reserve currencies, the euro's share showed an upward trend in the first three quarters of 2025, at 19.12%, 20.24%, and 20.33%, respectively. The Japanese yen, which was at 5.73% in the first quarter, rose to 5.82% in the third quarter of the year. The Chinese yuan rose from 1.96% to 1.99%, before falling slightly to 1.93% in the third quarter.

THE US DOLLAR'S LEADING POSITION CONTINUES

Although its weight in reserves has decreased, the US dollar continues to be the key currency in global financial transactions. Even though the US accounts for approximately 10% of global trade, more than half of worldwide trade is invoiced in dollars. In particular, the majority of commodity pricing is still done on a dollar basis, and although some energy trade is conducted in other currencies, the importance of the dollar is maintained.

Looking at the current picture in payments, according to SWIFT data, the dollar's share in global payments reached 50.49% in December 2025. In the same period, it was observed that the euro had a share of 21.9%, the British pound 6.73%, the Canadian dollar 3.44%, the Japanese yen 3.42%, and the Chinese yuan 2.73%.

DIVERSIFICATION STRATEGIES IMPACT THE DECLINE

Evaluating the change in global reserves, American Enterprise Institute Senior Fellow Steven Kamin said, “My expectation is that the dollar will continue to remain in a dominant position for the foreseeable future, but the extent of this dominance will diminish. In other words, the global monetary system will move toward a more balanced, multipolar world, but the dollar will continue to remain the most important currency.”

Kamin stated that countries' search for diversification in managing reserves is effective, emphasizing that in addition to the shift toward alternative and non-traditional currencies such as the Canadian or Australian dollar, the fact that some countries increasing their reserves have lower dollar shares pulls the general average down. Furthermore, fluctuations in the value of the dollar also contribute to this process.

POLICY UNCERTAINTIES AND THE RELATIONSHIP OF TRUST

Fitch Ratings Head of US Economic Research Olu Sonola stated that one of the factors causing the decline in the dollar's share is the increasing policy uncertainty in recent years. “In this context, uncertainties stemming from tariffs, uncertainties regarding Greenland, and now uncertainties regarding Japan's fiscal problems and the potential for the US to play a role in stabilizing these problems are included,” he said.

Despite the decrease in the dollar's share in reserves, Sonola made the following assessment: “We have not reached a point where it can be said that trust in the dollar has been lost; we are still very far from that situation.” While noting that the dollar's nominal value is kept at averages in the long-term perspective, Sonola stated that there is more diversification at the margins and that this trend is likely to continue in the coming period.

Regarding the possibility of another currency replacing the dollar, Sonola expressed that the dollar will maintain a significant advantage thanks to the depth of the US stock, credit, and bond markets.

News Source: 12punto