The greenback’s share in the global currency basket could drop
© Getty Images / Jed Share
Global economies will be rethinking how safe it is to rely on the US dollar in their foreign currency holdings, the deputy head of the International Monetary Fund, Gita Gopinath, said on Tuesday.
The statement comes after half of Russia’s forex holdings were effectively confiscated by international financial institutions amid sanctions placed on Moscow following the launch of its military operation in Ukraine.
“We are likely to see some countries reconsidering how much they hold of certain currencies in their reserves,” she stated in an interview with Foreign Policy magazine.
Gopinath said the IMF sees “increasing fragmentation” in global payments systems as one of the consequences of the current events. However, she stated that the US dollar, traditionally considered the world reserve currency, is not likely to suffer an “imminent demise.”
Still, depending on how long the crisis in Ukraine lasts, there could be larger effects, Gopinath said.