The yuan’s share of global foreign-exchange reserves is currently at about 2.7%, trailing the yen and sterling.
Alternative Bets
Other dollar alternatives also have drawbacks.
The euro is the most widely held currency in reserves after the greenback, but its reputation remains scarred from its near-death experience during the eurozone crisis. Gold, the global reserve asset for much of the 20th century, is impractical to move swiftly in a world where money changes hands at the speed of light.
Cryptocurrencies, free of fiat shackles, are too new and volatile to claim global status.
This leaves investors with no truly viable alternative to the dollar, said Jack McIntyre, a portfolio manager at Philadelphia-based Brandywine.
“Can I think of any country that matches the U.S.’s economy, military might and its deep markets right now? No, I can’t,” he said. “We’re not at that point where the dollar can be challenged.”
--With assistance from Greg Ritchie, Garfield Reynolds and Masaki Kondo.
This article was provided by Bloomberg News.