By the Beyond Insights Editorial Team Last reviewed: 16 June 2026 · 8 minute read
TL;DR: Dedollarization is real, but it is gradual. The US dollar's share of global reserves has drifted from 71% in 1999 to 57% in 2025, not collapsed. For Malaysian investors, the question is not whether to avoid US markets, but how to think clearly about currency, time horizon, and asset selection.
Image: Beyond Insights Education
Part 1: What Dedollarization Actually Is
Dedollarization is the gradual reduction of the US dollar's role across four functions: central bank reserves, trade invoicing, cross-border payments, and commodity pricing. The keyword is reduce, not replace. These four functions are moving at very different speeds.
Most people picture dedollarization as a sudden collapse. The reality is a slow tide. Some functions are slipping. Others have not moved in twenty years. For investors, that distinction is everything. Treat it as an all-or-nothing event, where the dollar either rules or crashes, and you will make poor decisions. See it for what it is, a slow and steady shift, and you can position yourself calmly.
Reserve currency transitions are generational. The Dutch guilder held for roughly 200 years. The British pound for about 100. The US dollar has held for 80 and counting.
The most useful lesson is how long these transitions take. The United States overtook Britain as the world's largest economy in 1872, became the largest exporter in 1915, and yet the British pound did not fully cede reserve status until the late 1940s. Monetary power lags economic power, often by generations.
Transitions are also rarely clean handoffs. The late-sterling, early-dollar period spanned decades of coexistence. If the US dollar's role does eventually evolve, expect a long overlap, not a sudden switch.
For a Malaysian investor reading today's headlines, that scale matters. If a reserve currency transition is genuinely underway, it will play out across the entire investing career of someone in their 40s, not over the next two years.
The dollar performs four distinct roles, and only one shows meaningful dedollarization. Here is how each looks as of late 2025 and early 2026:
| Function | What it measures | US dollar share | Trend |
| Central bank FX reserves | Share of global reserves held in USD | 56.92% (Q3 2025) | Gradual decline from 71% in 1999 |
| Global trade invoicing | Share of international trade invoiced in USD | ~40 to 50% | Stable for two decades |
| Cross-border payments (SWIFT) | Share of global financial transactions in USD | ~41 to 47% | Slight growth in recent years |
| FX market turnover | Share of all currency transactions involving USD | ~88 to 89% | Near record highs |
Sources: IMF, 2025; BIS, 2022; SWIFT RMB Tracker, 2025
Only central bank reserves show real dedollarization, and even there, the 14-percentage-point drop from 71% to 57% averages just 0.6 percentage points per year (IMF, 2025). Single-year drops of similar size happened in 2002, 2005, 2010, and 2015, and none triggered a regime change.
Where has the displaced share gone? Not to a single rival. The euro's share has been broadly flat for two decades. The Chinese yuan has actually been losing share since its 2022 peak, falling to 1.93% of allocated reserves in Q3 2025. Most of the reallocation has gone to smaller "nontraditional reserve currencies" like the Australian dollar, Singapore dollar, and Korean won. And, increasingly, to gold.
Gold now makes up roughly 9% of emerging market FX reserves, up from 4% a decade ago (Atlantic Council, 2025), driven primarily by buying from China, Russia, and Turkey. That is the genuinely new piece. But the dollar remains the only currency with the combination of liquidity, legal infrastructure, capital market depth, and institutional trust required to anchor the global system.
Part 2: Separating Signal from Noise
Three things drive the gap between the headlines and the data: social media, recency bias, and the easy confusion between short-term currency moves and long-term reserve status.
Social media rewards drama. "The dollar is dying" gets clicks. "The dollar is gradually diversifying" does not. Quiet evidence rarely goes viral.
Recency bias does the rest. The US Dollar Index fell about 9.4% in 2025, its worst year since 2017 (Reuters, 2025). Against the ringgit, the drop was steeper, from above 4.45 in April 2025 to under 4.00 by early 2026. When you watch a decline like that play out in real time, your brain assumes it will keep going. It is the same cognitive trap that drives people into bubbles at the top, just in reverse.
Jack Schwager, who has interviewed elite traders for four decades, put it plainly: "Making money has nothing to do with intelligence. Think of all the bright people that choose careers on Wall Street. If intelligence were the key, there would be a lot more people making money trading" (The New Market Wizards, 1992). What separates good investors from smart ones is emotional discipline. Dedollarization headlines are a near-perfect test of that discipline.
The third confusion is the biggest. Exchange rates and reserve currency status are completely different things. The dollar moves against the ringgit every day. That is normal. Reserve currency status changes on a 30 to 50 year horizon. That is structural.
Kathlyn Toh, founder of Beyond Insights, frames it bluntly: "Every time a reserve currency changes, there is a war" (Beyond Insights interview, 2024). She is not predicting one. She is pointing out that real reserve currency transitions are unmistakable events with major geopolitical rupture. They do not show up quietly in IMF spreadsheets. If the dollar's reserve role were genuinely in trouble, the world would look very different today.
Can BRICS or the Chinese yuan really replace the US dollar?
Not in any realistic near-term scenario. The yuan accounts for only 2 to 3% of global payments compared to the dollar's 41 to 47%. Three structural obstacles prevent the yuan from functioning as a true reserve currency: limited convertibility, capital controls, and managed exchange rate policy.
A reserve currency requires deep liquid capital markets, free convertibility, and predictable institutional governance. The yuan fails on all three. China keeps strict controls on capital flows. Foreign holders face restrictions on how much can be moved, how it can be used, and how it can be converted. The People's Bank of China manages the yuan's exchange rate within a narrow band.
The practical consequences show up in real trade. After 2022, Russia and India tried to settle bilateral trade in rupees and rubles. Russia ended up sitting on tens of billions of dollars in unwanted rupee balances (Reuters, 2023). By 2023, Russia was reportedly requesting yuan settlement instead, not because the yuan was ideal, but because it was the only alternative with reasonable cross-border functionality.
BRICS Pay was demonstrated in prototype form in Moscow in October 2024. As of mid-2026, it is still in early pilot. China's CIPS has grown rapidly but still settles a fraction of what SWIFT processes. The infrastructure for a true dollar alternative does not yet exist at scale.
There is also a deeper contradiction. To make the yuan a real reserve currency, China would need to open its capital account and accept market-driven exchange rate movement. Doing so would mean giving up the economic controls Beijing has used for four decades. The political calculation is harder than the financial one.
The BRICS narrative is real in the sense that these countries genuinely want to reduce dollar dependence. It is misleading in that wanting and achieving are very different things.
Part 3: What It Means for Malaysians
Less than most fear. The structural value of investing in US equities does not depend on the dollar's reserve currency status. It depends on the productive capacity of US-listed businesses and access to sectors that simply do not exist on Bursa Malaysia.
Apple's market capitalisation alone is approximately 8 times the size of the entire Malaysian stock market (CEIC, 2026). Most of the businesses driving artificial intelligence, advanced semiconductor manufacturing, global cloud computing, and biotechnology innovation are listed in New York. S&P 500 companies derive about 40% of their revenue from outside the United States. Their earnings scale with global economic growth, not with the dollar's reserve share.
On the currency question, the math is straightforward. If the S&P 500 rises 15% in dollar terms while the dollar falls 10% against the ringgit, the return in ringgit terms is roughly 5%. The currency move is a real drag, but the stock gain still produces a positive return. 2025 is a real-world example: the S&P 500 gained roughly 16% in price terms while the dollar fell 9.4% (RBC Wealth Management, 2026). For a Malaysian investor, that was still meaningfully positive.
The longer you hold, the less currency translation matters. The Nasdaq 100 has compounded at roughly 18 to 20% annually over the past decade. Bursa Malaysia's KLCI has been broadly flat over the same period. Even after ringgit-dollar movements across that decade, business performance dwarfs any currency effect.
There is also a structural point worth understanding. Holding US dollar-denominated assets is currency diversification for a ringgit-based investor. Ray Dalio has called diversification "the holy grail of investing" (Schwager, Hedge Fund Market Wizards, 2012). For a ringgit-based investor, US equities are exactly that: assets with different return drivers, denominated in a different currency, exposed to a different economy. Selling them because the dollar might weaken concentrates currency risk into ringgit, not the opposite.
The bottom line: Currency translation is a layer of volatility to manage, not a directional bet to time.
The ringgit has strengthened sharply since 2024. Should Malaysians still buy US stocks?
Yes. The ringgit strengthened from above 4.45 in early 2025 to a multi-year high near 3.88 in February 2026, and trades around 4.06 per dollar as of June 2026 (Trading Economics, 2026). Even after easing from that peak, it remains far stronger than its 2022 to 2024 levels. A stronger ringgit means each ringgit converts into more US dollars, giving Malaysian investors a discount on world-class assets.
This is the inverse of the question Malaysians asked from 2022 to 2024. Then, the concern was a weakening ringgit eroding foreign holdings. Now, the concern is that a strengthening ringgit means foreign holdings translate back into fewer ringgit. Both concerns share the same mistake. They treat currency movement as the primary driver of investment outcomes.
When the USD/MYR was at 4.45, a Malaysian investor paid RM4.45 to buy one US dollar of stock exposure. At around 4.06 today, that same exposure costs roughly 9% less. If you believe in the long-term productive capacity of US-listed businesses, the strong ringgit period is a buying opportunity.
There is also a structural argument. Bursa Malaysia is a phenomenal market for banking, plantations, and real estate. It is not, and is unlikely to become, a market for global technology platforms, advanced AI infrastructure, or breakthrough biotechnology. For exposure to the businesses building the next decade of the global economy, US equities are not optional.
The bottom line: A stronger ringgit lowers the cost of accumulating world-class assets. It is an opportunity, not a deterrent.
Gold serves a legitimate role as a portfolio hedge, but it is not a substitute for productive assets. Treating gold as the foundation of a portfolio is one of the most common errors driven by dedollarization fears.
Gold prices are around USD 4,100 per ounce as of June 2026, roughly 20% higher than a year ago though down from its 2026 highs (Trading Economics, 2026). Most of that rally has been driven by central bank buying, particularly from China, Russia, and Turkey, not by retail demand. Gold's sharp pullback from its earlier peak is itself a reminder that even safe-haven assets move both ways.
The fundamental problem is that gold is a non-productive asset. It does not generate earnings. It does not pay dividends. It does not compound through reinvestment. An ounce of gold today is still an ounce of gold in 30 years, just with a different price tag. A productive business grows revenue, expands earnings, retains capital, and reinvests. Over long horizons, the productive asset compounds while gold simply revalues.
Beyond Insights teaches a useful analogy: imagine choosing between owning a gold bar and owning a business. The gold bar sits in a vault. The business hires people, sells products, generates profit, and reinvests to grow. Over 20 years, the gold bar might be worth more in dollars, but the business has compounded its earnings power. One is a hedge. The other is wealth creation.
Most professional asset allocators suggest gold should occupy under 10% of a portfolio for hedging. Going significantly higher trades long-term wealth creation for short-term peace of mind.
The bottom line: Gold is a hedge with a 10% ceiling, not a wealth-building foundation.
Part 4: What to Do About It
The most underestimated risk for Malaysian investors right now is not currency movement or geopolitical instability. It is the slow erosion of purchasing power that comes from sitting in cash while the productive economy compounds without you.
Malaysian inflation has averaged 2 to 3% per year over the past decade. Bank fixed deposits generate returns in a similar range. EPF averages 5 to 6%. Compare that to the S&P 500, which has averaged roughly 10% per year over the past several decades, including dividend reinvestment. Even after currency translation back to ringgit, the gap is substantial. An investor who sits in cash for a decade because of dedollarization fears foregoes compounding that cannot be recovered.
The cognitive trap is that cash feels safe. A bank balance does not fluctuate. There is no daily mark-to-market. But the absence of nominal volatility masks a steady real erosion. Inflation compounds in the background. Productive assets compound in the background. The cash investor is doing neither.
The deeper point is this: the genuine risk is not that the US dollar collapses overnight, because it will not. The genuine risk is that fear of that scenario keeps an entire generation of Malaysians out of productive asset ownership during precisely the years they should be building wealth.
Think structurally, not reactively. Build a portfolio around productive assets in the world's most innovative companies. Manage currency risk through diversification, not avoidance. Use a framework to make decisions based on evidence rather than headlines.
Beyond Insights teaches a four-step framework called STPM, which stands for Select, Time, Protect, and Multiply. Here is how it applies to the dedollarization question:
Combined with the 40-30-30 framework (40% of stock movement reflects macro factors, 30% industry trends, and 30% company fundamentals), STPM lets Malaysian investors think about dedollarization in proportion. It is one input among many, not the dominant driver of outcomes.
At Beyond Insights, we believe every Malaysian deserves access to this kind of structured framework. Our mission is to bring out the best in people and their financial future, and that starts with replacing fear and confusion with clarity and confidence. If you want to learn the step-by-step method we teach our 8,500+ students, you are welcome to join our free 3-hour webinar where Kathlyn walks through the full STPM framework.
The dollar is not collapsing. The ringgit is at its strongest in years. The opportunity is real. The question is whether you are equipped to act on it with discipline rather than fear.
If you found this useful, the same evidence-led approach is at the heart of what Beyond Insights teaches its 8,500+ students.
Is the US dollar going to crash in 2026? No credible economic data points to a dollar crash in 2026. The US Dollar Index declined about 9.4% in 2025, but this is normal cyclical movement rather than structural collapse. Reserve currency transitions historically unfold over decades, not months.
Should Malaysians convert their savings to gold? Most professional asset allocators recommend gold occupies under 10% of a portfolio for hedging. Gold is a non-productive asset that does not generate earnings or compound through reinvestment. Treating it as the foundation of a portfolio rather than a hedge is rarely the right decision over multi-decade horizons.
What percentage of my portfolio should be in US stocks? There is no single correct number. Allocation depends on individual circumstances, age, risk tolerance, and time horizon. However, Malaysian investors with long-term wealth-building goals typically benefit from meaningful US equity exposure, given the sector scarcity on Bursa Malaysia and the dominance of US-listed companies in global growth sectors.
Is the Chinese yuan a safer reserve currency than the US dollar? No. The yuan faces three structural obstacles: limited convertibility, capital controls maintained by Beijing, and managed exchange rate policy. The yuan accounts for only 2 to 3% of global payments compared to the dollar's 41 to 47%, and its share of global central bank reserves has actually declined from its 2022 peak to 1.93% in Q3 2025.
How does a weaker US dollar affect my US stock returns as a Malaysian? A weaker dollar reduces ringgit-denominated returns when US holdings are translated back. In 2025, the S&P 500 gained roughly 16% while the dollar fell 9.4%, leaving a Malaysian investor with only around 6% in ringgit, no better than EPF that year. That is precisely why a single year of currency movement is the wrong lens. Over long holding periods, business performance dwarfs currency translation effects.
What is BRICS and will it create a new global currency? BRICS is an economic grouping that originally included Brazil, Russia, India, China, and South Africa, with several other members since added. BRICS Pay was demonstrated in prototype form in October 2024 but remains in early pilot. A unified BRICS currency faces enormous structural obstacles, including incompatible monetary policies across member states.
Will the ringgit keep strengthening against the dollar? The ringgit was Asia's best-performing currency in 2025, supported by strong domestic fundamentals, Malaysia's position in the AI and semiconductor supply chain, and Federal Reserve rate cuts in 2025. It reached a multi-year high near 3.88 in February 2026 before easing back toward 4.06 by mid-2026 as the US rate outlook shifted. Currency forecasts are inherently unreliable, and disciplined investors plan for both directions rather than betting on continued one-way movement.
Is now a good time to invest in US stocks? A stronger ringgit creates a localised discount for accumulating US dollar-denominated assets, which can be a constructive moment for measured, systematic investment rather than wholesale repositioning. The more useful question is whether your portfolio is appropriately structured for long-term wealth building.
This article is part of Beyond Insights' educational series on building wealth through productive assets.
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Beyond Insights is a financial markets education company based in Malaysia, founded in 2008. We are Asia's pioneer in trading psychology bootcamps and have trained over 8,000 students in the principles of disciplined, evidence-led investing across global markets. Our mission is to bring out the best in people and their financial future through structured frameworks, ongoing coaching, and a community built on shared learning.
This article was written by the Beyond Insights Editorial Team, drawing on company training materials, original research, and the insights of our founder.
Kathlyn Toh is Founder and Chief Trainer of Beyond Insights. With over 30 years of personal investing and trading experience, she has trained more than 8,000 students through Beyond Insights programs since 2008. Kathlyn is the architect of the STPM and 40-30-30 frameworks taught across all Beyond Insights programs. She is a regular speaker at Bursa Malaysia webinars and a recipient of the Top10 Magazine Malaysia Brand of the Year Award in the Investment Coaching category. Her perspectives have been featured in Bernama, BFM, and other national media outlets.
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All sources cited in this article are listed below with direct links for verification.
Central bank reserves and currency data International Monetary Fund (IMF). Currency Composition of Official Foreign Exchange Reserves (COFER), Q3 2025. data.imf.org/COFER
Bank for International Settlements (BIS). Triennial Central Bank Survey, 2022. bis.org/statistics/rpfx22.htm
Atlantic Council. Dollar Dominance Monitor, 2025 update. atlanticcouncil.org/programs/geoeconomics-center/dollar-dominance-monitor
SWIFT. RMB Tracker, 2025 monthly reports. swift.com
Market and currency performance Reuters / Global Banking and Finance. "IMF Reserve Data Stabilization in Q3 2025." December 2025.
RBC Wealth Management. "US Equity Returns in 2025: Record-Breaking Resilience." January 2026. rbcwealthmanagement.com
Trading Economics. Malaysian Ringgit currency data, 2026. tradingeconomics.com/malaysia/currency
Trading Economics. Gold spot price data, 2026. tradingeconomics.com/commodity/gold
CEIC Data. Malaysia Market Capitalization, April 2026. ceicdata.com/en/indicator/malaysia/market-capitalization
Reports and bilateral trade Reuters. "Russia wants to settle its trade in yuan, and India is running out of options." May 2023.
Books and expert sources Schwager, Jack D. The New Market Wizards: Conversations with America's Top Traders. HarperBusiness, 1992.
Schwager, Jack D. Hedge Fund Market Wizards: How Winning Traders Win. Wiley, 2012.
Internal sources Beyond Insights interview with Kathlyn Toh, founder and chief trainer, 2024.
Risk Disclaimer: This article is for educational purposes only and does not constitute financial advice. Investing in stocks, currencies, and other financial instruments involves risk, including the potential loss of principal. Past performance is not indicative of future results. Readers should conduct their own research or consult a licensed financial advisor before making investment decisions.
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