US FX Reserves: A Look at the History and Current State

The US FX reserves have a rich history that spans over a century. In 1913, the US government established the Federal Reserve System, which played a crucial role in managing the country's foreign exchange reserves.

The US FX reserves have grown significantly over the years, with a peak of $144.5 billion in 1964. This was largely due to the country's strong economic position and its role as a global leader.

However, the US FX reserves have fluctuated over time, with a low of $36.6 billion in 1971. This decline was partly due to the collapse of the Bretton Woods system, which led to a shift in the global monetary order.

The current state of the US FX reserves is a result of the country's economic policies and global events.

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The US International Reserves are a crucial aspect of the country's economic stability and global influence. The Treasury's Weekly Release of U.S. Foreign Exchange Reserves shows the levels of various official foreign assets, including foreign exchange, SDRs, U.S. reserve position in the IMF, and gold.

The ESF (Exchange Stabilization Fund) only holds the foreign exchange and SDR components of official reserves, with the foreign exchange assets divided between the ESF and the Federal Reserve's System Open Market Account (SOMA). The foreign exchange assets of SOMA are not U.S. government assets and are not reflected in any U.S. government financial statement.

The U.S. reserve position in the IMF and gold are not assets of the ESF but of the Treasury General Account. The ESF's foreign exchange reserves have been steadily increasing over the years, with the total foreign exchange reserves reaching a peak of $54,933.0 USD mn in August 2011.

Here are some key statistics on the US International Reserves:

The dollar's share of global reserves has been steadily decreasing over the years, with a 12 percentage point drop since the euro was launched in 1999. However, the US dollar remains the dominant international reserve currency, with a 59% share of global reserves in the fourth quarter of 2020.

The dollar's supremacy is expected to continue, with leading economists and central bankers expressing a consensus that while gradual diversification away from the dollar may occur, there is little prospect of a major challenge to its supremacy.

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The US dollar has been the dominant international reserve currency for decades, but its share of global foreign exchange reserves has been declining. This is evident in the recent data from the International Monetary Fund's (IMF) Currency Composition of Official Foreign Exchange Reserves (COFER) survey, which shows that the US dollar's share of global reserves fell to 59% in the fourth quarter of 2020, its lowest level in 25 years.

The US dollar's dominance in global trade and foreign exchange transactions has also been on the decline. According to the Atlantic Council's GeoEconomics Center, the US dollar's share of export invoicing is 54%, while the share of foreign exchange transactions is 88%. This is a significant drop from its peak, and it indicates that other currencies, such as the euro and the renminbi, are gaining traction.

Here's a breakdown of the US dollar's share of global foreign exchange reserves, trade, and transactions, compared to other major currencies:

The shift away from the US dollar is a gradual process, and it's likely to continue in the long run.

The US dollar's rise to becoming the world's reserve currency is a fascinating story. The UK's pound sterling held this position from the 19th century to the mid-20th century, but the US emerged as a major economic power after World War II, making it the natural choice for the reserve currency.

The US Treasury Department identified six essential criteria that qualify a currency to become a reserve currency, including share of global GDP, share of global trade, and financial markets index. The US dollar meets these criteria, and its dominance has remained strong in terms of exchange reserves, trade, and foreign exchange transactions.

According to the Atlantic Council GeoEconomics Center, the US dollar's share of global foreign exchange reserves stands at 58%, and its share of export invoicing is at 54%. The dollar's share of foreign exchange transactions is a whopping 88%. Here's a comparison of the US dollar with other currencies in these three important indicators:

Despite the US dollar's dominance, its share of global foreign exchange reserves has dropped to a 25-year low, standing at 59% in the fourth quarter of 2020.

Ukraine has increased its US dollar share in foreign exchange reserves from about 60% in 2014 to above 80% in 2023.

The annexation of Crimea by Russia in 2014 triggered a significant shift in Ukraine's reserve composition. This change is evident in the mirror image dynamics observed between Ukraine and Russia.

Russia has decreased the US dollar share of its foreign exchange reserves from about 40% in 2014 to below 15% in 2021.

Russia has increased its renminbi share in foreign exchange reserves from 0% in 2014 to almost 25% in 2022.

The reallocation of trade and financial flows between Ukraine and Russia, and their respective trading partners, has driven this reshuffling of foreign exchange reserves.

Ukraine has somewhat increased, then slightly decreased, its renminbi share in foreign exchange reserves, but at a magnitude about five times weaker and below 5%.

The Bretton Woods Agreement of 1944 was a pivotal moment in the history of the US dollar. On July 4, 1944, 44 countries signed the agreement, making the US dollar the world's reserve currency.

The dollar was pegged to gold, and most other currencies were pegged to the US dollar, which provided stability to the world economy. The International Monetary Fund and the World Bank Group were established as a result of this agreement.

At first, the stability of the dollar benefited the world economy, but the gold backing behind the dollars eventually lessened, reducing the value of currency reserves held by other countries.

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The Bretton Woods Agreement was a pivotal moment in the history of currency agreements. It was signed on July 4, 1944, in Bretton Woods, New Hampshire, United States.

Delegates from 44 countries agreed to the US dollar becoming the world's reserve currency. The International Monetary Fund and the World Bank Group were established as a result of this agreement.

The dollar was pegged to gold, and most other currencies were pegged to the US dollar. This enabled them to stabilize their currencies, which initially benefited the world economy.

The US dollar's relative stability made it a reliable choice for currency reserves.

The Smithsonian Agreement of 1971 was a significant event in the history of currency agreements. It led to the abandonment of the gold standard among G-10 member states.

In 1971, President Nixon decoupled the dollar from the gold standard, resulting in the introduction of floating exchange rates.

This move had many predicting the dollar's downfall, but so far, those predictions have been wrong.

The US dollar is the global reserve currency, but what does that mean in terms of actual data? According to the International Monetary Fund's Currency Composition of Official Foreign Exchange Reserves (COFER) database, the US dollar is the most widely held currency in foreign exchange reserves, making up a significant portion of allocated reserves.

The COFER data from the last quarter of 2023 to the first quarter of 2025 shows that the US dollar is the leading currency in foreign exchange reserves, with a share of 46.60% of global GDP anchored to the currency. This is a crucial factor in determining a currency's status as a reserve currency.

Here's a breakdown of the top currencies in foreign exchange reserves, based on the COFER data:

The US dollar's dominance in foreign exchange reserves is a significant factor in its status as a reserve currency.

The United States' Foreign Exchange Reserves were measured at 35.8 USD billion in November 2024.

This is a significant decrease from the previous month, where it was 36.3 USD billion.

The US dollar remains the dominant global reserve currency, with a share of 58% in global foreign exchange reserves.

The US dollar's dominance is also evident in trade and foreign exchange transactions, with a share of 54% in export invoicing and 88% in foreign exchange transactions.

Here's a comparison of the US dollar with other major currencies in terms of share of global foreign exchange reserves, export invoicing, and foreign exchange transactions:

The dollar share of global forex reserves has hit a 25-year low. In the fourth quarter of 2020, it fell to 59%, the lowest level since the euro was launched in 1999.

This decline reflects a shift away from the US dollar in the global economy, with other currencies like the euro, Australian dollar, Canadian dollar, and Chinese renminbi gaining traction. The dollar's share has dropped by 12 percentage points since 1999.

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The value of the US dollar has remained relatively unchanged, but its share of global reserves has declined, indicating that central banks are diversifying their currency holdings. This trend is expected to continue as emerging market and developing economy central banks seek further diversification.

Despite major structural shifts in the international monetary system, the US dollar has remained the dominant international reserve currency. However, its status is likely to change in the long run, with some countries, like Russia, already announcing plans to diversify their currency reserves.

The dollar's share of global reserves has declined from 71% in 1999 to 59% in 2020, while the euro's share has fluctuated around 20%. Other currencies, including the renminbi, have climbed to 9% of global reserves in the fourth quarter of 2020.

The dollar's decline is not a sudden event, but rather a gradual trend that has been building over the past few decades. Its share of global reserves has been declining steadily since the global crisis, with some countries starting to diversify their currency holdings.

The renminbi, in particular, has gained prominence, but it is still far from becoming comparable to the dominant share of the US dollar. The trends we are seeing do not diverge from what related research has also confirmed.

The dollar's share of global reserves has declined from 64.69% in 2017 Q1 to 57.74% in 2025 Q1, a decrease of 6.95 percentage points. This downward trend is expected to continue as central banks continue to diversify their currency holdings.

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