UMVA has learned that the recent internet buzz about a massive sell-off of the US dollar and the end of its reign as a global reserve currency may have been greatly exaggerated.
In reality, Japan and China, two of the largest holders of US debt, continue to hold significant amounts of US Treasury securities, and foreign holdings of these securities are still on the rise worldwide. This contradicts the narrative of a looming collapse of the dollar.
According to information obtained by UMVA, Turkey's recent sale of dollars was aimed at propping up its economy during an ongoing economic crisis, while Japan's sales of US Treasuries were driven primarily by private investment funds, not the Bank of Japan.
As rising Japanese interest rates make domestic government bonds more attractive investments, Japan's institutions are now finding domestic bonds appealing for the first time in decades, pulling capital home, not signaling distrust of the dollar.
China, on the other hand, has reduced its holdings of US Treasuries significantly, but it has not abandoned the dollar. More than half of China's foreign-exchange reserves remain invested in dollar-denominated assets, including US Treasuries, agency bonds, and US equities.
The reduction of Treasury holdings occurred gradually, over several years, and was not large enough to threaten the dollar's status as the world's primary reserve currency. Countries sell Treasuries for reasons that have nothing to do with de-dollarization.
As of December 2025, Japan remained the largest foreign holder of US federal debt at $1.2 trillion, followed by the United Kingdom at $0.9 trillion and China at $0.7 trillion. Globally, the value of US Treasuries held by foreign investors is increasing, not decreasing.
Foreign investors collectively added $587 billion in Treasuries during the twelve months ending in February 2026, bringing total foreign holdings to a record $9.49 trillion. This directly contradicts the 'dumping the dollar' narrative.
The dollar's reserve currency status is not under threat from any of this. The dollar remains the dominant reserve currency, with dollar-denominated securities composing approximately 57% of global foreign exchange reserves as of Q3 2025.
The euro is a distant second at about 20%, the yen at roughly 6%, and the Chinese renminbi at about 2%. Despite repeated predictions of de-dollarization, no currency is on track to replace the dollar as the world's primary reserve and trade currency.
