Recent declines in the value of the US dollar, along with weakening global demand for US Treasury securities as safe-haven assets, have revived questions about whether the world is “selling America.” Amid growing doubts about Washington’s global leadership, some observers argue that investors are increasingly inclined to hedge against the dollar.
Commentators who make this case point to what they see as a loss of investor confidence in US economic management. They cite a politicized policymaking process, persistent budget deficits that have pushed government debt higher, and pressure for lower interest rates despite stubborn inflation. They also point to the increasingly unilateral and unpredictable use of tariffs and other tools—including military force—to advance US objectives, a shift they argue is undermining the postwar global order.
Driven by geopolitical contention, some countries are seeking to reduce their reliance on the dollar in international transactions, citing concerns about exposure to potential US financial sanctions. China, for example, now settles roughly one-third of its foreign trade in yuan, up from about 20 percent in 2022.
Other observers, however, take a very different view. They argue that the dollar is here to stay and that its dominance remains firmly in place, supported by the United States’ position as the world’s largest economy and by the depth, liquidity, and regulation of its financial markets. For now, they say, the logic of TINA—there is no alternative—still applies. The Atlantic Council’s Dollar Dominance Monitor points in the same direction. No other major currency, including the euro or the renminbi, is able to replace the dollar in its key functions in global trade and finance.
There are merits in both sets of arguments. It is important to keep in mind that recent movements in the dollar’s exchange rate, its share of global reserves, and foreign ownership of US Treasuries all remain within historical ranges. Consequently, it is difficult to distinguish long-term structural shifts from normal cyclical fluctuations in the dollar’s exchange rate and shares in international economic and financial transactions. More data will be needed to settle the debate.
When it comes to the dollar, current data can be deceptive
A key argument suggesting a declining role of the dollar is its weakening exchange value. In January 2026, it fell another 1.2 percent, following a 10 percent decline over the past year against other major currencies. Viewed in context, however, the dollar had risen roughly 40 percent between 2010 and 2024. The recent weakness could therefore represent a correction of that long-term trend, moving the dollar closer to its historical average. Such a correction could benefit US exports—a point recently noted by US President Donald Trump. Yet a sharper or disorderly decline would pose serious risks to US markets and the broader economy and raise the risk of the dollar losing its dominance.
Commentators also point to the dollar’s declining share of global reserves, from 71 percent in 1999 to around 56.3 percent at the end of 2025. It should be noted, however, that exchange-rate movements affect these numbers, since official holdings of other currencies are expressed in dollars. According to the International Monetary Fund, once adjusted for exchange-rate effects, the dollar’s share changed little during the second quarter of 2025, standing at 57.79 percent at the end of the first quarter.
Even so, the current share sits in the lower half of its fifty-year range, from a high of 85 percent in 1976 to a low of 46 percent in 1991. These swings suggest that global reserve composition is shaped by a wide range of economic and policy factors, not just confidence in the dollar.
Is the world’s appetite for US debt waning?
Another commonly noted trend is the decline in the share of foreign holdings of US Treasuries, often interpreted as a sign of ebbing faith in the safe-haven status of US public debt. That share has fallen from roughly 50 percent in the early 2010s to around 30 percent today. Much attention has focused on the People’s Bank of China, which has cut its holdings from $1.3 trillion in 2013 to $682 billion in November 2025.
These figures, however, tell only part of the story. US Treasury International Capital data show that foreign ownership of US Treasuries has fluctuated widely over time, from 15 percent in the early 1980s to 50 percent in the early 2010s, before falling to 30 percent today. At the same time, foreign investors have continued to buy US Treasury securities. Total foreign holdings hit a record $9.35 trillion in November 2025, split between private entities ($4.8 trillion) and official institutions ($3.8 trillion). While the People’s Bank of China has reduced its Treasury holdings, this has been offset by state-owned commercial banks, which are now allowed to hold and invest China’s current-account surpluses in dollar-denominated assets, including US Treasuries.
The decline in the foreign share of US Treasury holdings since 2010 therefore mainly reflects the rapid expansion of US government debt following the 2008 global financial crisis, not a collapse in foreign demand. Much of the increased supply was absorbed by the Federal Reserve through years of quantitative easing, with its holdings peaking at $5.7 trillion in 2022. Quantitative tightening has since reduced Fed holdings to $4.3 trillion. When these holdings are excluded, the foreign ownership share stands at roughly 36 percent, rather than 30 percent. These considerations mean that foreign demand has not weakened as the raw data suggest.
Where the greenback goes from here
Recent declines in the dollar’s exchange rate and share of global reserves, along with questions about foreign demand for US Treasuries, may understandably worry market participants. But in broader perspective, these trends do not provide clear evidence that the dollar is losing its dominant role in global finance.
That said, current market movements could signal early structural adjustments in the global economy, as it shifts from a fraying postwar, rules-based system—anchored by dollar dominance—toward a new and uncertain order. This transition is likely to be marked by considerable volatility and anxiety. A balanced, data-driven approach to monitoring the dollar’s exchange value and global role will be essential for managing risks amid these monumental changes.
Hung Tran is a nonresident senior fellow at the Atlantic Council’s GeoEconomics Center, a senior fellow at the Policy Center for the New South, a former executive managing director at the Institute of International Finance, and a former deputy director at the International Monetary Fund.
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Image: Banknote Drawing of US Treasury Department Washington DC
