According to the IMF, the US dollar’s share in global reserves has declined to its lowest point in nearly 30 years. In Q2, the dollar’s reserve share dropped 1.5% from Q1 to 56.3%, the lowest since 1995.
The IMF clarified that this decline isn’t due to central banks selling off dollars but is mainly because of its sharp depreciation against other currencies. Researchers noted that exchange rate movements accounted for about 92% of the decrease, with the dollar weakening by 9% against the euro, 11% against the Swiss franc, and 6% against the pound.
This depreciation increased the value of other currencies when converted back into dollars, reducing the dollar’s relative share. The dollar’s recent weakness was driven by factors such as US tariff policies, pressure on the Federal Reserve to cut interest rates, and concerns over fiscal deficits linked to tax law changes signed by Trump.