Dollar’s dominant role coming under threat, S&P says

The US dollar’s dominance as the world’s reserve currency is likely to weaken over coming years, ratings agency Standard & Poor’s has said.

“We do expect a bit of dollar weakness and expect the dollar won’t be as dominant in world reserves as it has been in the recent past,” David Wyss, chief economist at S&P, said at a conference in Sydney, according to Bloomberg.

“It will still be the biggest reserve currency but we will go back to a more normal distribution, back to more like what we had 10 or 15 years ago when the dollar was 70pc of reserves instead of 90pc of reserves.”

The dollar has enjoyed its role as the world’s dominant currency since taking the mantle from the British pound last century.

Central banks around the world hold billions of their reserves in dollars but major developing economies, such as China, Brazil, India and Russia, have said they are seeking ways of creating a new world currency.