Harvard professor: Dollar dominance shaking amid debt and independence crises

Harvard University professor Kenneth Rogoff warned in a recent Nikkei interview that the U.S. dollar's dominance is facing a serious crisis. He pointed to an abnormal market phenomenon where the dollar's value is falling while Treasury yields are rising, suggesting that central banks are selling off their dollar assets. Rogoff argued that the deteriorating credibility of U.S. Treasurys and the compromised independence of the Fed are decisive factors. "Interest costs on U.S. debt now exceed defense spending, yet politicians are numb to the debt," he said, adding that President Donald Trump's pressure for rate cuts and the Department of Justice's investigation into Chairman Powell are undermining market confidence. He highlighted that the dollar's share of foreign exchange reserves has fallen to 56%, its lowest level since 1994, and predicted that a multi-polar currency era will emerge in the next four to five years, with the yuan, euro, and crypto assets sharing the market.