Morgan Stanley Highlights Gold as Emerging Challenger to Dollar

Morgan Stanley has indicated that the role of the U.S. dollar in the global system is gradually diminishing. According to Odaily, while credible alternative currencies remain limited, gold has emerged as the primary challenger to the dollar in an increasingly multipolar world. Research from Morgan Stanley shows a decline in the dollar's international influence, evidenced by its reduced share in central bank foreign exchange reserves and decreased usage in corporate and emerging market sovereign issuances. Despite this, the dollar still holds the largest share of global reserves, indicating the absence of a significant challenger. However, the inclusion of gold changes the scenario. The proportion of gold in central bank holdings has risen from about 14% to between 25% and 28%, with no signs of slowing down. Risk premiums and hedging activities continue to pressure the dollar while supporting gold demand. Additionally, policy factors driving 'de-dollarization' are currently in a 'neutral to slightly accelerating' state, and their short-term evolution will determine the extent of the de-dollarization trend.