Dollar's Reserve Currency Status Hits 31-Year Low.

Dollar's Reserve Currency Status Hits 31-Year Low. Foreign central banks are diversifying away from US dollar assets, pushing the USD share of global foreign exchange reserves to 56.8% in Q4, the lowest level since 1994. While central banks haven't dumped dollar holdings outright, they've aggressively accumulated assets in other currencies and gold. This shift reflects growing concerns about US economic stability and geopolitical tensions. The decline matters significantly because foreign demand for US securities has historically funded America's massive twin deficits in trade and federal budgets. Historical precedent suggests this path is unsustainable long-term, potentially triggering inflation spikes and higher bond yields. The dollar previously fell below 50% reserve share during the 1990s amid stagflation and recessions, before recovering during the tech boom era.