US dollar remains dominant despite tariff turmoil, says top IMF official

The weakness in the US currency and higher yields of its sovereign bonds are not signs of a major structural shift in the global economic order, says a top International Monetary Fund (IMF) official.

- Ovais Subhani

The movements represent the high level of uncertainty about US trade policy, which is weighing down on US and global economic growth, the IMF's first deputy managing director, Ms Gita Gopinath, said in an interview with The Straits Times.

The US dollar nosedived and US sovereign bonds—referred to as treasuries—logged their deepest decline in more than two decades in the week after US President Donald Trump shocked the world with his reciprocal tariff policy on April 2.

The moves sparked concerns about a wholesale exodus of foreign investors from American assets and an end to the safe haven asset designation for both the US dollar and treasuries.

The greenback has so far in 2025 dropped by about 10 per cent against its major peers, and is down by 5.3 per cent against the Singapore dollar.

Still, given 70 per cent of Singapore's trade is denominated in US dollars, the greenback's decline can lower export earnings. It can also hurt Singapore's sovereign wealth funds that are heavily invested in US equities and bonds.

Like most central banks, the Monetary Authority of Singapore also holds US treasuries and a large portion of its foreign exchange reserve in US dollars.

However, Ms Gopinath said: "The dollar remains a dominant currency."

"It remains the case that in terms of financial markets that are deep and liquid and of sufficient scale, the US really doesn't have many other competitors, and that matters a lot for the importance of the currency," she said, adding: "So, the US dollar's dominance remains."

As at early 2025, the total capitalization of the US stock market was estimated at around US$52 trillion (S$67 trillion), and the total outstanding value of US bonds stands at US$28.6 trillion. In addition, US financial institutions also manage global assets exceeding US$135 trillion.