US Dollar Dominance in the Global FX Market 2025: Why It Still Holds — and What It Means for Investors

 US Dollar Dominance in the Global FX Market 2025: Why It Still Holds — and What It Means for Investors

In 2025, the global foreign exchange (FX) market is recording **historic trading volumes**, and yet the status of the US Dollar (USD) remains remarkably resilient. According to the latest survey by the Bank for International Settlements (BIS), daily FX turnover hit approximately **US$9.6 trillion** in April — a jump of **28 %** since 2022. ([World Economic Forum][1])

Despite this massive growth in global FX activity and rising talk of alternatives, the US Dollar is still on one side of roughly **89 %** of all currency trades. L

Why the USD remains the anchor currency

Liquidity and depth**: Markets know that dollar-pairs offer the deepest liquidity and the tightest spreads, making them the preferred venue for traders and institutions. ([tastyfx.com][2])

* **Reserve currency status**: Central banks continue to hold large portions of reserves in the dollar. Even with incremental shifts, the dollar’s share remains well above what its share of global GDP might suggest. ([IMF][3])

* **Invoicing and debt issuance**: Many cross-border transactions, trade settlements, and debt issuances continue to be denominated in USD — reinforcing its structural role.

The global FX market in flux

While the dollar remains dominant, the landscape is showing signs of change:

* The share of the Chinese Yuan (CNY) in FX transactions has risen to about **8.5 %**, up from earlier years. ([The Week][5])

* Emerging-market (EM) currency trade, especially EM-to-EM flows, is increasingly bypassing the dollar by settling in local currencies or regional alternatives. ([Standard Chartered Bank][6])

* Concepts like **“dedollarisation”** are gaining traction — the process by which some countries reduce reliance on the USD due to strategic, geopolitical or economic reasons.

Why this matters for investors and readers in China, U.S., U.K., Brazil & Singapore

For China: The yuan’s rising share in global FX and China’s effort to internationalise its currency signal opportunities and risks — particularly in currency pairing, hedging strategies and trade financing.

For the United States: The dollar’s dominance gives the U.S. advantages (cheaper borrowing, global financial leverage) but also challenges — for example, managing the trade-off between policy flexibility and maintaining confidence in financial markets.

For the United Kingdom: As sterling’s share in global FX transactions is roughly 10 % according to recent data, the U.K. must navigate its position amid currency competition and global financial hub shifts. 

For Brazil: As part of the EM universe, Brazil is affected by global dollar strength or weakness. A dominant USD means both opportunities (hedging, export pricing) and exposures (import cost, debt servicing in dollars).

For Singapore: As a major FX hub in Asia alongside London, New York and Hong Kong, Singapore’s financial ecosystem is deeply intertwined with dollar-based currency flows.