Dollar’s global dominance here to stay for now: Gita Gopinath

New Delhi: Gita Gopinath — former Chief Economist and First Deputy Managing Director of the International Monetary Fund (IMF) — believes the US dollar will continue to hold its supremacy in the global economy for the foreseeable future. She attributes this staying power to the strength of American institutions and the depth of its financial markets.

Speaking on a recent episode of the IMF podcast, Gopinath explained why she has long been drawn to the subject of dollar dominance during her academic and policy career. “The world is highly asymmetric,” she said, pointing out how the dollar’s outsized influence continues to shape global trade and finance.

Gopinath emphasized that a currency’s global relevance is often assumed to mirror a country’s share of trade, but reality tells a different story. “It’s not just that emerging markets don’t get to use their currencies as much — even many advanced economies find their currencies barely reflected internationally,” she observed.

Instead, the US dollar has established a commanding role across multiple spheres — not only in trade but also in global finance, reserves, and payments. According to her, this dominance carries “very important implications for how economies absorb shocks and what kinds of policies are effective.”

Gopinath had taken leave from Harvard University in 2018 to join the IMF, where she steered economic analysis during the pandemic and other major geopolitical crises. After serving as the IMF’s First Deputy Managing Director, she is now returning to Harvard as the Gregory and Ania Coffey Professor of Economics.