Central banks tweaking US$ reserves, with euro and gold gaining ground

UBS poll finds economic, geopolitical risks driving re-evaluation of US dollar holdings

- Annabelle Liang

Although the US dollar is set to remain the dominant currency in official reserves, it could have a shakier foothold in the years ahead, with the euro, renminbi and gold poised to gain ground.

Economic and geopolitical risks are driving a re-evaluation of US dollar holdings, according to a UBS survey of 40 central banks and reserve managers.

The majority of respondents had little trust in US President Donald Trump's right-leaning Make America Great Again (Maga) policies, which include tariffs and cost-cutting measures.

Nearly a third of respondents had reduced or were planning to reduce their exposure to US assets.

Dr Massimiliano Castelli, head of global sovereign markets strategy and advice at UBS Asset Management, said there were clear signs of diversification from the US dollar over the past year, with the euro being the biggest beneficiary of the move.