The Global Currency Market in 2026: Liquidity Factors and Reserve Currency Selection Strategies

In 2026, the global monetary system is undergoing a serious restructuring. Experts identify the following global trends:

1. Central banks of various countries tightened their monetary policy in 2022–2024, raising key rates. Now they are beginning to cut them or are reaching a plateau.

2. Inflation in developed countries has settled at 2.5–3%. This is substantially lower than before: for example, in June 2022 it reached 9.1% in the US. However, it is still above central bank targets: in the US, at the end of May 2026, it stood at 4.1% against a target of 2%. Therefore, expectations of an imminent easing of market conditions appear premature.

3. Geopolitical conflicts are accelerating the abandonment of the dollar in international trade. IMF analysts are considering a scenario of a complete restructuring of the system within 10–15 years. The Fund provides the following data:

Fundamental Factors in Currency Valuation in 2026

When deciding in which currency a company should hold reserves and conduct settlements, corporate treasury should consider at least 3 factors.

1. Interest rate differential. Let us compare key rates in the world's leading countries in 2026:

• Fed — a cut from a peak of 5.25% in 2023–24 to 4.25%;

• ECB — 2.75%;

• China lowered its base lending rate to 3–3.5%.

This configuration means capital flows to the US. But dollar strengthening creates problems for US exports and multinational corporations. It becomes more expensive for them to convert revenue from other currencies.

2. Macroeconomic indicators. When assessing any currency, three criteria should be analyzed:

• trade balance (how much debt a country has relative to GDP);

• government debt;

• inflationary pressure.

In 2026, in the US, debt exceeds 128% of GDP, inflation holds at 3.3%, and the budget deficit is growing. This creates long-term pressure on the dollar.

In the Eurozone, indicators are somewhat better: debt — about 95% of GDP, inflation lower — 2.5–2.7%, so the euro is holding in the $1.08–1.12 range.

But the Eurozone budget deficit is growing. In 2024 it stood at 3% of GDP, in 2025 — 2.9%, and by the end of 2026 the IMF expects growth to 3.3%.

3. Geopolitical discount. Sanctions, trade wars, and market fragmentation reduce confidence in the classic reserve currencies of G7 countries. This is one of the key reasons why the dollar's share fell from 70% in 2020 to a historic low of 55.6%. Against this backdrop, BRICS+ countries are actively developing alternative settlement systems.

In parallel, the use of the geopolitical discount is growing. Markets are increasingly applying a discount to transactions that pass through jurisdictions under Western sanctions. Such operations appear riskier and more expensive in the eyes of counterparties and banks.

In response, companies are shifting settlements to zones with lower political risk, using the UAE dirham and the Chinese yuan — currencies not under sanctions. They are becoming instruments for risk reduction.

Analysis of Key Currency Sectors

The US dollar still dominates the world. De-dollarization is a slow process. In 2026, the USD remains the main unit of account: it accounts for 58% of global reserves and 88% of all currency operations. This is explained by:

In 2026, the USD strengthened by 5% from average 2024–2025 levels. This is due to the resilience of the US real sector and Treasury yields at 4.25%.

Risks: debt burden and the possibility of Fed rate cuts that would weaken the dollar.

The euro's position is rather fragile, as is the entire EU economy, which is caught between inflation and stagnation, notes the Swiss banking group UBS. There is a high risk of recession in Germany and continued weakness in the industrial sector. For the ECB, the priority policy since June 2024 has been rate cuts.

All this does not add to the euro's appeal as a reserve asset. Although its rate has stabilized at $1.08–1.12, it generally underperforms the dollar in yield and liquidity, though it can be used for hedging if US data deteriorate.

The yuan's share of reserves has grown to 4.8%, but this is still an order of magnitude less than the dollar's. In 2026, China's economy continues to grow, albeit slowing. According to the World Bank, China's GDP growth in 2026 will be 4.4%, lower than 5% in 2025, due to weak domestic demand and problems in the real estate sector.

The main risks of the yuan: strict currency controls by the PBOC and hidden devaluation to support Chinese exports.

Among emerging market currencies, the UAE dirham (AED) attracts attention. Its main advantage is that it is tightly pegged to the dollar at a fixed rate of 3.6725 AED/USD. It is very convenient for countries under sanctions. However, its dependence on the dollar transfers all US risks onto this currency.

A special position on the list is occupied by tokenized fiat (stablecoins), such as USDT and USDC. These are not currencies in the strict sense, since they are pegged to the dollar at a 1:1 ratio. However, stablecoins have become full-fledged operational channels for B2B settlements.

In 2026, they allow international payments to be made in minutes instead of days. USDT and USDC provide access to dollar liquidity without the involvement of the traditional banking system, but within a regulated framework. This is valuable for corporate treasuries, as it allows legal settlements with counterparties from virtually any jurisdiction.

A significant benefit of using stablecoins is the reduction of transaction costs, which translates into direct benefit for treasury. According to CoinMarketCup, transaction costs in USDT range from 0.01 to 5 USDT. The base bank fee when using SWIFT is $25–50.

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As we can see, each class has advantages and disadvantages. Therefore, a transition to multi-currency baskets is practically inevitable. In 2026, holding capital in a single currency is considered a critical risk management error. The high level of US debt, fragmentation, and sanctions risks are forcing the creation of currency baskets. For example:

CFO Checklist: Minimizing Currency Risks in Foreign Economic Activity

Calculate the company's net currency position. Determine the ratio of currency assets and liabilities. Identify the currencies in which the company has the largest open position and assess the sources of risk for each of them. This will make it possible to understand which exchange rate fluctuations may have the most significant impact on financial results.

Use hedging instruments (forward contracts and options) to lock in the rate on long-term contracts for a period of 3 to 12 months. This protects transaction margins from adverse exchange rate movements. A forward excludes the possibility of gaining from favorable market movements but ensures predictability of the financial result.

Implement digital settlement instruments (stablecoins) for international payments. This allows transaction costs to be reduced and delays associated with interbank settlements to be eliminated. You gain access to dollar liquidity without long correspondent chains.

Conduct regular compliance audits of correspondent banks for sanctions risks. In 2026, many banks have already tightened requirements for clients from jurisdictions with elevated risk levels, which creates the danger of secondary sanctions.

FAQ: Frequently Asked Questions

Which currency is considered the most stable for long-term capital holding (from 3 years)?

The Swiss franc (CHF) retains its status as the benchmark safe-haven asset, thanks to a budget surplus and independent monetary policy. However, for operational business, its liquidity is inferior to USD or AED. It remains a good addition to a risk-diversified portfolio, but not a base currency for cross-border settlements.

Is it safe to use CNY (yuan) as a replacement for the dollar in reserves?

The yuan is advantageous for settlements with China and Asia, but it carries risks due to strict currency controls by the PBOC and hidden devaluation to support Chinese exports. The yuan's share of reserves is growing (to 4.8% by the end of 2026), but it is still extremely far from fully replacing the dollar.

What is Carry Trade and is it relevant in 2026?

Carry Trade is earning on the interest rate differential between currencies. An investor borrows in a currency with a low rate and invests in assets with high yield.

However, high currency volatility in 2026 makes this strategy dangerous for corporate treasuries. The difference between 4.25% in the US and 2.75% in Europe looks attractive, but any exchange rate change can override this margin. Therefore, corporate treasuries do not use Carry Trade as a primary strategy — only hedging.