Dollar’s Real Competition Is Decades Away, Franklin’s Desai Says

The dominance has been the subject of much scrutiny but Franklin Templeton sees the greenback remaining the currency of choice.

The US currency’s status is backed by three pillars, namely the scale of the world’s largest economy, the depth of its market and its institutional credibility, Sonal Desai , chief investment officer of the firm’s fixed-income division, wrote in a note. There are no credible alternatives and it would take decades to build the institutional infrastructure required to support such a currency, she added.

Debate about the dollar’s pre-eminence has intensified as President Donald Trump’s erratic trade, geopolitical and fiscal policies erode the appeal of US assets. The euro, gold and digital assets are seen by some analysts as contenders to become the reserve asset of choice.

“The euro area cannot issue a unified safe asset at sufficient scale. The renminbi operates behind capital controls and lacks convertibility,” Desai wrote, referring to the yuan. “The US dollar’s real competition, in my mind, is not yet on the horizon.”

Desai noted that data from the Bank for International Settlements 2025 triennial survey found that the dollar was on one side of 89% of over-the-counter FX turnover. This compared to just 8.5% for the yuan.

The greenback’s current weakness is cyclical, and not structural, Desai wrote. In real trade-weighted terms, the dollar remains well above its troughs of the mid-1990s and the late 2000s, and some dollar softness is consistent with its global reserve currency status.