Bank economists see dollar resilience despite reserve slide
Standard Chartered researchers say exporters, investors and U.S. asset demand are keeping the dollar strong even as some central banks buy more gold.
By Hana Yoshida · Markets Reporter
3 min read
Standard Chartered economists say worries about a broad retreat from the U.S. dollar are overstated, even as the currency’s share of global reserves has fallen. Their view matters because governments, investors and companies are reassessing dollar exposure amid concerns over U.S. debt, sanctions, tariffs and growing non-dollar trade.
Fortune reported that the dollar accounted for 57% of global foreign exchange reserves in 2024, down from 71% in 1999 and the lowest level in 25 years. The shift has fed debate over whether the dollar’s role as the world’s main reserve and trading currency is weakening.
Divya Devesh, Standard Chartered’s co-head of FX research for ASEAN and South Asia, pushed back on that argument at a July 15 briefing at the bank’s Singapore office, according to Fortune. “We’re not really in this de-dollarization camp,” Devesh said.
Devesh said he sees “re-dollarization” in the behavior of exporters and investors. He cited Taiwan as an example, saying exporters there convert only $2 of every $100 in overseas earnings into New Taiwan dollars, while most of the rest is held mainly in U.S. dollars.
Standard Chartered’s argument runs against concerns raised by economists and commentators who say U.S. fiscal pressure, Washington’s use of financial sanctions and tariffs, and trade settled outside the dollar could weaken the currency’s global standing, Fortune reported.
Some Asian governments are reducing risk tied to the dollar, according to Fortune. Central banks have been adding to gold holdings, with the People’s Bank of China carrying out multi-month buying programs and the Reserve Bank of India bringing about 100 tonnes of gold back to domestic vaults.
Standard Chartered economists acknowledged that the U.S. federal debt burden could deteriorate, Fortune reported. They argued that the United States is not alone in facing fiscal strain, which limits the appeal of alternatives to the dollar.
Eric Robertsen, Standard Chartered’s chief strategist and global head of research, said investors who sell dollars still need another asset or currency to buy. “The alternatives out there are not very attractive,” Robertsen said, after noting that investors may hold negative views on Trump, U.S. twin deficits or the federal budget path.
Robertsen said bond markets are more likely than foreign exchange markets to reflect anxiety about U.S. deficits. He said he does not expect the dollar to lose safe-haven status in the near or medium term because of the budget deficit alone.
He also pointed to a change in investor behavior after tariff announcements last year. Robertsen said European investors carried out significant dollar selling or currency hedging at that time, but the Federal Reserve’s decision not to cut rates and signs of U.S. economic resilience have renewed interest in U.S. outperformance.
Devesh said U.S. productivity gains are another support for the dollar. He said the gains extend beyond artificial intelligence and should improve earnings, drawing more foreign capital into U.S. assets.
Demand from overseas investors for U.S. assets remains strong, Devesh said. Standard Chartered sees that demand as the force keeping the dollar resilient despite reserve diversification and gold buying by central banks.
This story draws on original reporting from Fortune.