The supremacy of the American dollar over other currencies continues to fuel debates among economists around the world.
According to data provided by the International Monetary Fund (IMF), the share of the US dollar in foreign exchange reserves remains dominant, although it has continued to slowly decrease.
At the same time, the share of other currencies such as the Australian dollar, Canadian dollar, Chinese renminbi and Korean won increased.
The source also informs that this predominance of the dollar (or the disproportionate role of the dollar in the world economy), is dependent on the robustness of the American economy, the tightening of monetary policy and the intensification of geopolitical risks, having contributed to further valuing the greenback.
With this in mind, the institution’s analysts affirm that the predominance of the dollar on the global economic scene remains uncontested in 2024.
These were based on the following insights and inputs:
• Share of international reserves: approximately 60% of global foreign exchange reserves are held in US dollars;
• Transaction and global economy: more than 88% of international transactions on the foreign exchange market (Forex) involve the US dollar, making it the most traded currency in the world.
• International trade: approximately 40% of global commercial transactions are denominated in US dollars, consolidating its role as an international reference currency.
• Exchange rate: the dollar continued to strengthen against a basket of major currencies.
Flory Musiswa/Intern
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