Latest news with #dollarDominance
Reuters
29-05-2025
- Business
- Reuters
Japan likely held off US Treasury sales, says ex-BOJ policymaker
TOKYO, May 29 (Reuters) - Japan likely held off selling from its huge U.S. Treasury holdings as there is no alternative investment given the dollar's status as a global reserve currency, former Bank of Japan (BOJ) policymaker Sayuri Shirai said on Thursday. Japan and China are the two largest holders of U.S. Treasuries, making their presence a huge focus of attention whenever U.S. yields spike. Although both countries say little about their trading, the huge U.S. Treasury sell-off in April has led to market speculation they could have, or might have, unloaded their holdings. "Japan probably hasn't sold its holdings as there's nothing else to buy. What countries including Japan want to hold onto as a reserve currency is the dollar rather than the euro," Shirai told Reuters in an interview. "The dollar's dominance as a reserve currency is unwavering" given the depth of U.S. capital markets and the country's technological competitiveness, she said, ruling out the idea of Japan diversifying out of U.S. assets. Now a professor at Keio University, Shirai retains close contact with current global policymakers. U.S. President Donald Trump's sweeping tariff announcement on April 2 led to a market rout, including in U.S. Treasuries, casting doubt over the dollar's status as the safest haven for the global financial system. Trump's previous complaints about the strong dollar also raised suspicions that Washington wants an adjustment lower in the world's top reserve currency. European Central Bank President Christine Lagarde said on Monday the euro could become a viable alternative to the dollar if the bloc's governments could strengthen its financial and security architecture. But Shirai said she had doubts the euro could become a real alternative to the dollar, as a politically fragmented Europe and a lack of depth in the region's capital markets diminish its allure as a reserve currency. In Asia, China's yuan is the more likely potential competitor to the dollar, she said. "Europe is a distant region for Asia and not a big trade destination," Shirai said. "China, by contrast, is boosting its presence in Asia with an increasing volume of trade now using the yuan," Shirai said. "While the dollar will remain the dominant currency in Asia, the increase in yuan-denominated trade will likely continue." The dollar's role has been on the decline for years. The currency now makes up 58% of international reserves, the lowest level in decades - but still well above the euro's 20% share, according to data from the International Monetary Fund. The share of holdings in yuan stood at 2% and the Japanese yen at 5.8%.
Yahoo
29-05-2025
- Business
- Yahoo
Japan likely held off US Treasury sales, says ex-BOJ policymaker
By Leika Kihara TOKYO (Reuters) -Japan likely held off selling from its huge U.S. Treasury holdings as there is no alternative investment given the dollar's status as a global reserve currency, former Bank of Japan (BOJ) policymaker Sayuri Shirai said on Thursday. Japan and China are the two largest holders of U.S. Treasuries, making their presence a huge focus of attention whenever U.S. yields spike. Although both countries say little about their trading, the huge U.S. Treasury sell-off in April has led to market speculation they could have, or might have, unloaded their holdings. "Japan probably hasn't sold its holdings as there's nothing else to buy. What countries including Japan want to hold onto as a reserve currency is the dollar rather than the euro," Shirai told Reuters in an interview. "The dollar's dominance as a reserve currency is unwavering" given the depth of U.S. capital markets and the country's technological competitiveness, she said, ruling out the idea of Japan diversifying out of U.S. assets. Now a professor at Keio University, Shirai retains close contact with current global policymakers. U.S. President Donald Trump's sweeping tariff announcement on April 2 led to a market rout, including in U.S. Treasuries, casting doubt over the dollar's status as the safest haven for the global financial system. Trump's previous complaints about the strong dollar also raised suspicions that Washington wants an adjustment lower in the world's top reserve currency. European Central Bank President Christine Lagarde said on Monday the euro could become a viable alternative to the dollar if the bloc's governments could strengthen its financial and security architecture. But Shirai said she had doubts the euro could become a real alternative to the dollar, as a politically fragmented Europe and a lack of depth in the region's capital markets diminish its allure as a reserve currency. In Asia, China's yuan is the more likely potential competitor to the dollar, she said. "Europe is a distant region for Asia and not a big trade destination," Shirai said. "China, by contrast, is boosting its presence in Asia with an increasing volume of trade now using the yuan," Shirai said. "While the dollar will remain the dominant currency in Asia, the increase in yuan-denominated trade will likely continue." The dollar's role has been on the decline for years. The currency now makes up 58% of international reserves, the lowest level in decades - but still well above the euro's 20% share, according to data from the International Monetary Fund. The share of holdings in yuan stood at 2% and the Japanese yen at 5.8%.
Reuters
19-05-2025
- Business
- Reuters
No BRICS asset pile big enough to rival dollar, Brazil central bank director says
BRASILIA, May 19 (Reuters) - Brazil's central bank does not see any realistic prospect of emerging nations in the BRICS group creating markets large enough to topple the U.S. dollar's dominance within the next 10 years, monetary policy director Nilton David said on Monday. There is not a meaningful stock of BRICS-denominated assets that could offset the dollar at the moment, David told a central bank webcast. "I don't think that will change over the coming decade," he added. The director acknowledged that alternative settlement tools could gain traction and help boost bilateral trade deals, but nowhere near enough to dislodge the dollar in any visible horizon. The BRICS acronym refers to the five major emerging economies of Brazil, Russia, India, China and South Africa, which have been working together to address global issues. The group recently added six other members. Reuters reported in February that Brazil's presidency of BRICS this year would shelve talk of a common currency, focusing instead on ways to trim dollar reliance, such as linking payment systems and exploring blockchain standards set by bodies like the Bank for International Settlements. U.S. President Donald Trump has repeatedly cautioned the BRICS group - whose original members were Brazil, Russia, India and China - against attempts to challenge the supremacy of the dollar. Founded in 2009 and soon expanded to add South Africa, the group has recently included Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates, making it a growing diplomatic counterweight to traditional Western powers. David also said he views bitcoin as "a speculative currency by nature," noting that Brazil's $340 billion foreign-exchange reserves remain overwhelmingly in dollars because nearly all of the country's external transactions are settled in the U.S. currency. According to the director, the central bank wants to preserve the liquidity and depth of its foreign-exchange market but it acknowledges that these features have side effects. David noted that the Brazilian real has a "natural" correlation with risk assets, making it more volatile. It is often the pivot for portfolio managers, he said, adding that this attracts investors who hold the currency only briefly, causing demand to swing sharply.
