• Financial Survival Network
  • Posts
  • Status of U.S. Dollar as Global Reserve Currency and Exchange Rates: Slow Long-Term Decline On Track

Status of U.S. Dollar as Global Reserve Currency and Exchange Rates: Slow Long-Term Decline On Track

April 03, 2023

by Wolf Richter Wolf Street

But the Chinese Renminbi didn’t make any progress at all last year.

The share of the US-dollar as global reserve currency dropped to 58.4% at the end of Q4, according to the IMF’s new COFER data. This was the dollar’s lowest share of global reserve currencies since 1994.

Back in 1978, the dollar’s share started plunging from around 85% of global exchange reserves as inflation exploded in the US, and other central banks got cold feet holding securities denominated in this stuff. In the 1980s, inflation started to come down. But central banks – and the rest of the world – took a long time to regain confidence in the dollar, and the dollar’s share of reserve currencies didn’t bottom out until 1991, with a share of 46%. Then came the bounce until the euro showed up, which put a stop to the bounce. The chart shows the share of the dollar at the end of each year.