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US dollar loses shine as reserve currency for emerging economies

Washington's growing deficit drives central banks to euro, yen and gold

As the coronavirus exacerbates the so-called twin deficit in the U.S., the dollar may be starting to lose its draw as a reserve currency.   © Reuters

TOKYO -- The share of U.S. dollar-denominated assets in the world's foreign reserves sank for the fifth straight year in 2020 to 59%, its lowest level in a quarter century, as emerging economies like China and Russia diversify holdings amid concerns over the greenback's prospects.

As a trusted and liquid asset, U.S. government bonds have long been a go-to option in foreign reserves, which governments and central banks maintain as a backup fund of sorts in case of a monetary emergency.

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