After Yen Weakness, Is “Dollar Weakness” Next? — The Future of the Reserve-Currency Dollar and Realistic Scenarios for Would-Be Successors: Currencies and Stablecoins

Key points up front

• Current market view: In 2025, a year-to-date dollar-weakening phase has been on investors’ minds, yet as of October the direction is headline-driven (rate-cut expectations, U.S.–China frictions, uncertainty around U.S. monetary policy). Surveys of major strategists suggest gradual dollar weakness over 3–12 months.
• Structural position: Even so, the dollar’s dominance remains firm. Around 56% of global FX reserves are in USD, and the dollar is on 88% of FX trades. In payment currencies, the renminbi is still only about 2.9% (as of 2025).
• Reality check on “de-dollarization”: There are more case-by-case RMB-settled deals in crude and LNG, but the mainstream view is that a broad currency shift would take decades. A BRICS common currency remains at the “concept” stage.
• If the dollar were no longer the anchor: The contenders are the euro / RMB / SDR (IMF Special Drawing Rights) / gold & currency baskets / digital (stablecoins). However, no single currency can replace the dollar today; in practice, multipolarity is the realistic outcome.
• Stablecoin potential: In 2025, the U.S. enacted comprehensive stablecoin legislation, advancing the regulatory framework. Through payments, trade, and asset tokenization, stablecoins are likely to expand as a digital extension of the dollar bloc.
• Operational impact for Japan: Prepare for a tug-of-war between yen weakness and dollar weakness with tenor-based scenario management and hedging, plus in-house pilots using stablecoins (small cross-border payments, inventory hedging)—practical steps you can take now.

Who this helps (concrete user profiles)

This article primarily targets Japan-based companies and investors sensitive to FX.

• Import-reliant retailers/manufacturers: Heavy yen-weakness burden on inputs; looking to rethink pricing and inventory if a turn toward dollar weakness emerges.
• Cross-border e-commerce & SaaS: Overseas sales are growing while exploring stablecoins to lower payment/remittance costs.
• Treasury/Accounting/Treasurers: Redesign hedging policies and surplus cash deployment amid FX risk and a short-rate down-cycle.
• Institutional investors & family offices: Considering reserve-currency allocation, gold and multi-currency baskets, and tokenized T-bills as alternative safety.

We avoid rumors and provide practitioner-friendly decision inputs based on public data and primary sources, in a gentle tone. Key figures are woven into the text; details are organized in the References at the end.

1. What markets are doing now (as of October 2025)

In 2025, there have been notable episodes of downward pressure on the dollar from early in the year. The backdrop includes growing expectations of U.S. rate cuts and political/policy uncertainty. From early autumn onward, the tape has whipsawed on headlines. Surveys into October point to a consensus of “gradual dollar weakness over the next 3–12 months,” while event-driven rebounds are also observed from time to time.

On Japan’s side, the yen remains fragile. Renewed slides toward the upper-¥140s/¥150s, plus repeated official warnings and intervention chatter, keep returning to the news. Many still assess the BOJ’s policy normalization as “extremely gradual,” with a prevailing view that a durable yen-buying trend will take time.

In short, under a tug-of-war between “persistent yen weakness” and a “bias toward dollar weakness,” USD/JPY lacks clear direction—the practical difficulty for operators.

2. Why the dollar remains the “reserve currency” (by the numbers)

While short-term price action varies, the dollar is still the foundation of the system.

• FX reserves: Around 56% of allocated global FX reserves are in USD (2025 Q2; broadly similar even after FX adjustments).
• International payments: On SWIFT, RMB holds 2.88%, ranked #6. It trails the dollar by a wide margin despite gains versus the euro and pound.
• FX market: The BIS triennial survey shows the USD on one side of 88% of trades. In market depth, liquidity, and hedging instruments, the USD is in a class of its own.
• Latest turnover: A 2025 flash points to $9.6T/day—the USD’s edge remains intact.

This network effect is self-reinforcing. Because reserves, payments, and hedging markets are USD-centric, “we use it because it’s convenient, and it’s convenient because we use it.”

3. If “dollar weakness” persists—operational impacts across three horizons

Short term (≤3 months): When rate-cut bets build, traders tend to sell DXY rallies; yet geopolitics and trade frictions can trigger flight-to-quality into the USD. Stage hedges and use short rolls as a baseline.

Medium term (6–12 months): The strategist consensus favors a gentle USD drift lower. However, yen-specific weak spots (growth, wages, policy pace) remain, so USD/JPY may stay range-bound at a low altitude. Importers should manage average rates using a mix of forwards/NDFs/options.

Long term (2–5 years): De-dollarization talk will continue, but switching costs in rules and market plumbing are massive. Expect multipolar “use-by-function” to progress: the USD share eases slowly while its core role persists—our baseline.

4. If the dollar lost primacy—cool-headed comparisons of challengers

4-1. Euro: large scale, but limits without full fiscal union

EU capital-market integration is progressing, but a single pan-euro safe asset (Euro T-bill) is thin, and the lender-of-last-resort backstop isn’t as explicit as in the U.S. The euro likely holds #2 in reserves, but displacing #1 is premature.

4-2. Renminbi: strong in trade, capital-account constraints are the wall

China is pushing RMB-denominated LNG and other commodities, with political support for GCC energy in RMB. Yet capital controls, rule-of-law concerns, and the depth of investable reserve assets imply time is needed to meet reserve-currency criteria. The 2.88% SWIFT share speaks for itself.

Moreover, a full switch to RMB pricing for Saudi crude is generally viewed as a long-timeline prospect; politics, security, and FX management remain triple challenges.

4-3. SDR (IMF Special Drawing Rights): the strongest “theoretical” multi-currency answer

SDR weights (2022–2027): USD 43.38%, EUR 29.31%, RMB 12.28%, JPY 7.59%, GBP 7.44%. SDRs are convenient for sovereign-level settlement, but private-sector payments remain limited. In short, “conceptually powerful, practically distant.”

4-4. Gold & currency baskets: complements, not substitutes

Central-bank gold buying is notable in places, but gold does not naturally serve payment or credit-creation roles. The realistic path is long-horizon optimization via multi-currency/multi-asset diversification, with a gradual reduction in USD share—a quiet shift to multipolarity.

5. Could stablecoins become the “new anchor”?

5-1. 2025: U.S. comprehensive legislation as a game-changer

In June and July 2025, the GENIUS Act (U.S. stablecoin law) passed Congress and was signed into law, creating the first nationwide framework for payment stablecoins’ backing, issuance, and redemption. This enabled banks and major PSPs to enter more confidently and advanced compliant cross-border payments.

Key points

• Mandates 1:1 redemption with liquid backing assets.
• Sets entry conditions for foreign issuers and Big Tech.
• Clarifies supervisory guardrails to contain systemic risk.

5-2. Private rollout accelerates: multi-chain PYUSD and USDC

PayPal’s PYUSD expanded to L2s and multiple chains, strengthening ties with major exchanges and payment networks. This addresses on-the-ground pain points such as fees, instant settlement, and auto-netting.

Meanwhile, market size is growing. Tokenized T-bills (e.g., BlackRock’s BUIDL) function as high-liquidity, on-chain safe assets, building an ecosystem that supports both stablecoin asset management and payment rails.

5-3. Not a new “reserve currency,” but the digital extension of the dollar

Most stablecoins are USD-pegged. Rather than replacing the dollar, they make it faster, cheaper, and programmable—maturing into base-layer infrastructure. Because they are not central-bank money, they lack a lender of last resort. Thus, they are more likely “bolt-ons expanding the dollar zone” than throne-takers.

5-4. Risks: issuer / smart-contract / operations

• Backing & redemption trust: Regulation helps, but governance quality still depends on each issuer.
• Technology risk: Bridges and contracts can be vulnerable.
• Operations: Human/system errors (e.g., mis-mints) can scale quickly and heavily.

6. If the dollar’s centrality ebbs—how to sketch the future

A: Multipolar scenario (base case)

• The USD share declines slowly while its core is maintained. Around it, euro, RMB, gold, and USD stablecoins are deployed by function. A future of “use-case-based coexistence.”

B: Fragmentation scenario (risk)

• Re-intensified trade tensions/sanctions strengthen bloc economics, expanding limited settlement networks (RMB bloc, ruble bloc, etc.). But liquidity depth stays thin, pushing up hedging and funding costs.

C: Hyper-digital scenario (opportunity)

• Regulatory clarity + blue-chip adoption push stablecoins/tokenized safe assets into corporate back-office rails. In trade finance, inventory collateral, and small cross-border, 90% cost reductions become common case studies.

7. A practical guide for Japanese corporates (FX × digital currencies)

7-1. Hedge design by horizon (sample guidelines)

• Short term (≤3 months): Manage the average rate with split orders + short forward rolls. Before event risk, use options (calls/puts) to cover both tails.
• Medium term (6–12 months): Tilt the base case to USD-weaker, adjust hedge ratios in stages. Mind yen-specific factors, and avoid over-baking a deep USD/JPY drop.
• Long term (2–5 years): Use a currency basket (USD/EUR/CNH/gold) to stabilize purchasing power. Consider an internal “virtual base currency” modeled on SDR weights.

7-2. A 90-day roadmap for stablecoin pilots

• Day 1–30: Scoping & design
  • Build KYC/AML workflows. Pre-agree accounting/tax treatment.
  • Pick use cases: Small cross-border B2B (e.g., paying overseas SaaS vendors, intercompany true-ups) and measure time & fee deltas.
• Day 31–60: Limited operations
  • Test B2B payments with USD stablecoins (USDC/PYUSD, etc.). Feed back latency/fee improvements to stakeholders.
• Day 61–90: Expansion & internal policy
  • Document permissions, address management, cold/hot operations.
  • Trial tokenized T-bills for very short-term surplus cash (verify daily liquidity and redemption).

Note: Ensure compliance with Japan’s Payment Services Act and internal controls. Go to production only after audit frameworks are in place.

8. Investor lens—portfolio implementation (sample allocations)

• Core safety assets: U.S. T-bills / JGBs / gold.
• Currency diversification: USD/EUR/CNH/JPY, in both hedged and unhedged sleeves.
• Liquidity bucket: USD stablecoins (Treasury-backed, major issuers) for payments & dry powder only.
• Alternatives: Tokenized T-bill/bond funds to improve operational efficiency (professional accounts; check mandates).

This is not about replacing the dollar itself, but about cushioning regimes while optimizing operations.

9. Fact-checking common misconceptions

1. “A BRICS common currency is imminent.”
   → No official plan. Discussions exist, but no implementation timeline is in place.

2. “RMB settlement will suddenly become mainstream.”
   → More large, one-off deals exist, but capital controls and market depth are big constraints. The 2.88% SWIFT share is today’s reality.

3. “Stablecoins will become the reserve currency.”
   → Stablecoins are mostly USD-linked. They are a digital extension of the dollar, not a new reserve. That said, they can become dominant infrastructure for payment & settlement efficiency.

10. Wrap-up—Win with design, not hype

• Near-term markets: There’s a bias toward USD weakness, but beware event-driven snapbacks. Stage hedges and pair with options.
• Structural view: The USD remains the base layer. With 56% of reserves and 88% FX trade involvement, the network effect will not vanish overnight.
• Future state: Multipolarity is realistic. Euro, RMB, SDR, gold, and USD stablecoins will coexist by function.
• Operations: Price, COGS, and budgets using an internal “SDR-like” yardstick; pilot stablecoins for cross-border payments; deploy tokenized safe assets for a slice of surplus cash—this is the pragmatic 2025 playbook.

A sudden “fall of the dollar king” is unlikely—which is exactly why quiet paradigm shifts reward those who redesign early. The future of money won’t crown a single monarch; it will be a cast that co-stars by use case. May this piece add a practical decision lens you can use today.

References (checked on 2025-10-25)

• IMF COFER: USD share in FX reserves (2025 Q2 flash) / IMF Data: COFER Q2 flash note
• BIS press release: 2022 Triennial Survey (USD on 88% of FX trades)
• Reuters: 2025 Triennial flash (FX near $9.6T/day)
• SWIFT RMB Tracker (Jul 2025: RMB share 2.88%)
• Reuters: Dollar-weakness year—strategist survey (Oct 2025) / Various Oct market reviews / Stabilization bounce
• Reuters: Japan FX officials—latest remarks & yen coverage / Ex-BOJ executive interview
• U.S. stablecoin law (GENIUS Act): Senate passage / House passage; pre-signature / Presidential signature; enactment
• PayPal: PYUSD L2 expansion & usage growth / Coinbase fee waivers for PYUSD
• BlackRock BUIDL: growth & role of tokenized T-bills / Overview & AUM / RWA market overview
• Progress in RMB-settled energy trades (e.g., LNG) / Xi’s Riyadh speech (encouraging RMB energy settlement)
• Status of a BRICS currency (official denials)