An analysis of the modern day foreign exchange landscape
The US dollar appears on one side of nearly nine out of ten foreign exchange transactions worldwide. The euro trails at 28.9%, followed by the Japanese yen (16.8%) and British pound (10.2%).
The Bank for International Settlements released preliminary results from its April 2025 Triennial Survey on September 30, 2025 — revealing that daily OTC foreign exchange turnover now averages $9.6 trillion. The jump from $7.5 trillion in 2022 represents a 28% increase in just three years.
In this guide, we’ll look at how and why USD has been able to maintain such a strong position in the global economy, and how it coexists with the current forex climate — declining European influence, and rising Asian currencies.
Why does the US dollar maintain such overwhelming dominance?
The dollar's 89.2% share of global FX turnover isn't an accident. Multiple reinforcing factors create a self-perpetuating cycle that makes USD the default choice for international transactions.
Network effects
When everyone else uses dollars, you benefit from doing the same. Transaction costs drop. Liquidity deepens. Counterparties multiply.
Central banks hold approximately 57.8% of their foreign exchange reserves in dollars (according to IMF COFER data for Q4 2024). Most commodities — crude oil, natural gas, gold — are priced in USD. The Federal Reserve has acted as a critical global backstop through swap lines during crises.
Vehicle currency
Even when neither party in a trade uses dollars domestically, they often convert through USD because of superior liquidity.
A Thai exporter selling to a Brazilian importer might settle in dollars rather than converting THB directly to BRL — the dollar acts as an intermediary. The BIS explicitly describes the role — USD reduces friction in cross-border transactions that would otherwise require less liquid currency pairs.
Market depth
US Treasury securities represent the deepest, most liquid bond market globally. Investors can move billions without significantly affecting prices. That’s a characteristic that makes the dollar attractive for large-scale transactions and reserve management.
Author
Muhammad Uddin
RemitBee
Muhammad Uddin is a financial content writer with a focus on global markets, foreign exchange, and digital payments. He creates clear, research-driven content aimed at helping readers better understand market trends and financial topics.
