Asia's Diversification into Gold and Other Assets Leaves Dollar Dominance Intact

The debate over de-dollarisation in Asia has been ongoing for years, and a recent analysis by Haver Analytics sheds new light on the topic. According to the report, Asia's presence in US portfolio markets has declined since the early 2010s, with Japan's share of foreign holdings of US long-term securities roughly halving from 14.5% in 2012 to about 8% in July 2026.

Mainland China's slide is even starker, falling from 13.4% at the start of 2012 to around 3%. The euro area has absorbed most of that ground, rising from about 19% to around 26%, while the UK sits at a record 10.6%. Despite this, Japan remains the largest foreign holder of Treasuries, with holdings valued at USD 1.1tn.

Official reserves also tell a similar story, with the dollar's share falling by close to 6 percentage points over the past eight years, to 57.1% in the first quarter of 2026. However, no single currency has picked up all of it, and the residual group of other currencies gained most, which points to diversification rather than substitution.

Gold purchases also indicate diversification, with Singapore adding more than 60% to its holdings over the past eight years, while India, Thailand, and China have also increased their gold reserves significantly. Japan's central bank raised its policy rate to 1.25% last week, striking a hawkish note.

Despite this, Japan remains the outlier among major central banks, with a gap of about 2 percentage points between its policy rate and the average policy rate of the Fed, ECB, and Bank of England. The yen has rebounded from a record low after coordinated intervention by Tokyo and Washington.