The U.S. dollar closed the first half of 2025 down 10.8%, marking its weakest first-half performance since 1973. But let’s put this in perspective: prolonged periods of currency weakness are normal, driven by economic and geopolitical factors. This ebb and flow is just how currencies—and markets—work.
Despite this dip, the U.S. dollar’s status as the world’s dominant reserve currency remains unshaken. Here’s why:
Global Dominance: ~50% of international trade, loans, and global debt securities are denominated in USD. Nearly 90% of foreign exchange transactions involve the dollar.
Reserve Leader: The U.S. dollar dominates with 58% of global allocated reserves, far surpassing the euro at 20%, the next largest currency.
Economic Power: The U.S. represents ~25% of global GDP, with transparent, well-regulated, and liquid financial markets unmatched globally.
Stability & Trust: The U.S. government and its currency offer unmatched stability, making the dollar a safe haven during market stress.
Resilience: Two decades ago, the dollar held 66% of global reserves; today, it’s 58%. This reflects a broader global economy—not a decline in its primacy.
Talk of the dollar’s demise is fashionable but baseless. Its strength stems from U.S. economic might, market efficiency, and global trust. Weakness? Yes. Waning relevance? Not a chance.
