Global monetary trends show de-reservification over de-dollarization

Analysis of global monetary trends suggests that the shift in foreign exchange reserves is a process of ‘de-reservification’ rather than true de-dollarization. While some scrutinize IMF data for signs of the US dollar losing dominance, the dollar's share in reserves has remained relatively stable, moving from 56.5% to 57%.

Significant shifts are occurring in how assets are held. In China, state-owned banks hold foreign assets nearly equal to the central bank's holdings. In Japan, the Government Pension Investment Fund (GPIF) manages approximately $986 billion in foreign assets, nearly matching the government's foreign exchange reserves. Similarly, South Korea's National Pension Service holds more foreign assets than the Bank of Korea's reserves.

On the broader economic front, the Federal Reserve has implemented its first interest rate hike since July 2023, raising the target range to 3.75%-4%. This tightening occurs alongside concerns regarding massive global debt levels, which have reached approximately $130 trillion when combining public and private debt, and geopolitical tensions in the Bab el-Mandeb strait affecting global fuel and oil transit.