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The Reign of the Dollar Is Coming to an End. What Investors Can Do About It.
Investment in foreign stocks and debt could be juiced by a falling dollar.
By
Reshma Kapadia

Updated Feb 19, 2026, 2:01 pm EST / Original Feb 19, 2026, 1:00 am ES

The dollar is in decline, and investors have to learn to live with it.

The past 12 months were tough for the greenback. The U.S. Dollar Index, which measures the dollar’s value against a basket of developed currencies, slid 8% over the past year—and the list of potential concerns grows longer and longer. They include the breakdown in the U.S.-led multilateral system, growing concern that the dollar will continue to be weaponized through sanctions and seizures, worries about Federal Reserve independence, unease about profligate U.S. government spending, and a long overdue rebalancing as growth and yields abroad become more relatively attractive.

None of that implies the dollar will suddenly fall from grace, abandoned in a wave of panic selling. It isn’t about to lose its reserve status, suddenly replaced by the Chinese yuan or another currency. But the dollar is becoming less popular for savings, for trade, and as the ultimate safe asset. That makes diversification, through international stocks and bonds, especially in emerging markets—and a dollop of gold as a buffer—good options for the years ahead.

If individual investors and large institutions collectively decide to lighten up on their dollars, it will leave a mark. “Some of the U.S. exorbitant privilege will fade,” says Daleep Singh, says Daleep Singh, PGIM vice chair and global chief economist and former deputy national security adviser in the Biden administration. The cost of losing some of that luster: potentially higher borrowing costs, less capacity to absorb a financial shock, and less ability to create one with sanctions, Singh adds.

The dollar has always been mightier than the size of the U.S. economy suggests it should be. Its share of the global market in currency reserves and international debt issuance is in the range of 60% to 80%, or two to three times the U.S. share of the global economy. For years, critics have argued that the dollar’s place of primacy would erode, to no avail. There was no alternative.

That began to change more than a decade ago as China started to wean itself off the dollar, diversifying reserves into gold while pushing for wider use of its own currency. But the true impetus came with Russia’s invasion of Ukraine, and the sanctions and freezing of assets that followed. The weaponization of the dollar pushed central banks to pare back some of their holdings for gold. President Donald Trump’s push to own Greenland and his constant threats of tariffs rattled European allies and their trust in the U.S., forcing them to consider alternatives as well."
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