Morgan Stanley says that the dollar’s dominant status as the world’s reserve currency is set to persist. That is in part due to its credible challengers, such as the Chinese yuan, being rather lacking at the moment.
While there have been some concerns about the dollar’s reign at the top recently, Morgan Stanley argues that the greenback can still hold its own. That despite worries about US debt levels and some signs of reserve managers diversifying away from the dollar.
“We expect USD’s dominant reserve currency status to endure despite ongoing challenges from an increasingly multipolar world. This supports our current preference for USD and should provide long-term support, though periods of weakness are to be expected on cyclical conditions and valuations.”