The IMF explains why the dollar's fall is not the beginning of the collapse of its key role in the world

Despite the largest six-month drop since 1973 the US dollar remains the key currency in the global financial system. About it says in the International Monetary Fund's External Sector Report.

According to IMF analysts, the dollar's decline is not a sign of a loss of confidence, but is the result of excessive currency appreciation in 2024, geopolitical turbulence, growing demand for hedging, and changing expectations about US monetary policy.

The IMF emphasizes that the dollar's dominance has persisted for more than 80 years, despite global shifts such as the collapse of the Bretton Woods system (1973), the end of the Cold War (1991), and the creation of the euro (1999).

The dollar is the main currency of international trade, finance, and reserves, and the IMF believes that its central role has not wavered.

The dollar also has an "inordinate privilege"-the United States can borrow cheaper and in larger amounts than other countries. At the same time, this also has a flip side, an "inordinate burden," as the currency provides insurance for the world against global shocks.

The IMF also points to the development of digital dollar assets, including stablecoins. They can strengthen the dollar's dominance, but also pose risks to financial stability.

The report emphasizes that trade barriers in deficit countries, particularly in the United States, do not change global imbalances, as they act as a shock to the domestic economy, reducing investment and savings.

• In the first 100 days of Donald Trump's presidency, the US dollar demonstrated the worst performance since the days of Richard Nixon.
• The US dollar index (DXY) on June 12 fell below 97.8, which was the lowest value since 2022.