*Global Trend: US Dollar’s Share in Central Bank Reserves Drops to 59.2% in Q3 2023* The US dollar’s global dominance in central bank reserves has witnessed a significant decline, reaching 59.2% in the third quarter of 2023, as per the latest data from the International Monetary Fund (IMF). This downturn aligns with the ongoing trend of de-dollarization worldwide, with the greenback’s share down from around 70% in 2000.
While the dollar remains the primary reserve currency globally, the euro holds the second position with its share slipping to 19.6%. The Japanese yen saw a slight increase in its proportion of world reserves, reaching 5.5%. The Chinese yuan, British pound, Canadian dollar, and Swiss franc experienced minimal changes.
Simultaneously, data from SWIFT indicates that the yuan’s share in international payments reached a record high in November, making it the fourth most used currency globally.
The rise in cross-border yuan lending and currency swaps between the People’s Bank of China and foreign central banks, including Saudi Arabia and Argentina, underscores China’s efforts to reduce dependence on the US dollar. This shift away from the dollar gained momentum in response to geopolitical events, such as Ukraine-related sanctions leading Russia to seek alternatives to the Western financial system.
Additionally, the US dollar is poised for its worst year since 2020, with a more than 2% decline in the US dollar index, reflecting concerns about potential rate cuts in the coming year.
