As the dollar depreciates by more than 10% in half a year, central bank governors: Its dominance is still hard to shake in the short term.

Cailian Press, July 2nd (Edited by Xia Junxiong)
On Tuesday, local time (July 1st), at the annual central bank meeting held in Sintra, Portugal, several central bank governors stated that the status of the US dollar as the global preferred reserve currency will not face significant challenges in the short term.
Due to the unpredictability of President Trump’s economic, trade, and security policies, which has raised doubts about the outlook of the dollar, it depreciated by more than 10% in the first half of this year, with the last such significant depreciation occurring back in 1973. However, the dollar still accounts for 58% of the world’s foreign exchange reserves, maintaining its core position within the global monetary system.
Eurozone Central Bank Governor Lagarde mentioned that if the Eurozone were to implement necessary reforms, the euro could potentially become an alternative to the dollar in the future. She noted that this year might be considered a “key node” in this process.
However, Lagarde also emphasized that “major changes still require tremendous effort and will take a long time.”
She stated that in the current environment filled with uncertainty and unpredictability, investors are seeking alternatives, and the euro seems to benefit from this.
“Such changes cannot happen overnight, never before in history,” Lagarde added. “But clearly, some mechanism has been broken. Whether it can be repaired or whether it will continue to break down—I think there is still no consensus.”
Japanese Bank Governor Kazuo Shirakawa also expressed that any major shift depends on the progress of structural reforms.
“To some extent, it depends on what efforts the European Union or China can make in enhancing the efficiency and convenience of their currencies,” he cited the attempt to integrate capital markets in the Eurozone.
British Bank Governor Bailey believes that the change in the dollar’s status remains “far off.”
“I don’t see… any significant changes at present,” he said.
Bailey emphasized that any reserve currency must be able to provide sufficient safe assets for market use in guaranteeing and risk hedging.
South Korean Bank Governor Lee Chang-yong indicated that even though investors currently hold dollar assets, discussions about whether the dominance of the dollar will change in the long term have already begun.
“People seem to be talking about this. But they are still holding dollars, just increasing their hedge ratio,” he pointed out at the event.
Despite the dollar’s current share in global reserves dropping to its lowest point in decades, its 58% share is still significantly higher than the second-placed euro, which has a 20% share.