Dollar’s dominant reserve currency status to endure, says Morgan Stanley

The U.S. dollar’s dominant reserve currency status is likely to endure partly because credible challengers, including the Chinese yuan, are lacking, Morgan Stanley said in a report on Thursday, Reuters reported.

Concerns about a surge in U.S. debt levels and heightened geopolitical risk have triggered a debate about the dollar’s status as the world’s no.1 reserve currency, with some signs that reserve managers have started to diversify away from the greenback.

“We expect USD’s dominant reserve currency status to endure despite ongoing challenges from an increasingly multipolar world,” Morgan Stanley said in a note.

“This supports our current preference for USD and should provide long-term support, though periods of weakness are to be expected on cyclical conditions and valuations.”