Global financial institutions are set to reduce exposure to the US Dollar: 4% of financial institutions plan to reduce their US Dollar exposure in their portfolios over the next 12-24 months, the first such reading in 3 years, according to an OMFIF survey of 74 central banks and 16 public pension and sovereign wealth funds managing over $10 trillion in reserve assets. The US Dollar is the only major currency expected to see a lower exposure among survey respondents. Furthermore, 8% expect to reduce the US Dollar in their reserves over the next 10 years. Nevertheless, the US Dollar is still the most held currency across financial institutions, at 58%, slightly down from 60% in 2025. Meanwhile, 82% of central banks surveyed now hold physical gold, up from 71% last year. 51% of respondents cite protection against geopolitical risk as a motivation for holding gold, up from 40% in 2024. Central banks are diversifying from the US Dollar into gold.(The Kobeissi Letter)