US Dollar’s Role as the World’s Reserve Currency

Reflecting on the US Dollar’s Reserve Currency Role

Early in my Substack journey, I wrote about the status of the US Dollar as the world’s reserve currency. This was shortly after the turbulent introduction of reciprocal tariffs, a period marked by a sharp decline in the Dollar and widespread pessimism. At that moment, there was intense speculation in financial circles about whether the Dollar might lose its dominant reserve position, potentially making way for alternatives like the Euro.

Reserve managers—those responsible for overseeing the official foreign exchange reserves of nations such as China and Japan—play a crucial role in this landscape. These reserves accumulate as countries purchase Dollars to counteract upward pressure on their own currencies.