Global central banks are increasingly abandoning dollar — Goldman Sachs

While the dollar and euro remain major reserve currencies, the dominance of the former is beginning to wane. Central banks are feeling the need to diversify into non-traditional currencies.

The South Korean won, Singapore dollar and Chinese yuan are prime candidates for potential reallocation of central bank reserves.

Strategists at Goldman Sachs Group Inc. believe this shift away from the dollar may continue, as the trend has gained momentum over the past decade.

Central banks are actively seeking alternatives to the dollar as Donald Trump's policies threaten to reshape global trade and economic dynamics. Many are also increasing their gold reserves.

There is no doubt that the US currency is still the key one in the world. Most central bank reserves are still held in dollars, which are essential for commodity transactions, such as oil purchases, due to the lack of a viable alternative.

However, trading indicators in the currency market suggest weakening demand for the dollar. The Bloomberg Dollar Index has dropped more than 7% from its February peak, signaling a decline in US economic exceptionalism.