Dollar's Global Reserve Share Hits 30-Year Low, but De-Dollarization Threat May Be Exaggerated
The US dollar's share of global foreign exchange reserves has hit a 30-year low, sparking claims that central banks are accelerating their retreat from the world's dominant reserve currency.
New research from the New York Fed suggests this trend may be overstated. Data shows that between 2019 and 2023, 62 countries increased their dollar allocations slightly when changes in portfolio preferences were isolated.
The decline was largely driven by a small group of large reserve holders: China, Russia, Mexico, and Morocco. These countries held reserves roughly as large as the combined reserves of the remaining 62-country sample.
When exchange rates are taken into account, the dollar's share of allocated reserves appears to be more stable than initially thought. The IMF reported that currency valuation effects accounted for 92% of the decline in the second quarter of 2025, with only a marginal change in reserve allocations when holding exchange rates constant.