By Marta Vilar – MADRID (Econostream) - A softer US dollar has done little to disrupt sovereign funding strategies, with debt management offices signaling that their USD issuance plans remain firmly in place despite the currency’s recent depreciation.

Officials interviewed by Econostream emphasized that currency allocation decisions are anchored in structural factors such as market depth, investor access and post-swap funding costs, rather than exchange rate direction.

While the dollar’s weakness has rekindled discussion within some European sovereign issuers about strengthening the euro’s international role, it has not translated into concrete shifts in issuance policy.

For some sovereigns, the dollar’s role is deeply embedded. Canada, which targets roughly $5 billion of foreign currency borrowing this year, remains committed to issuing global bonds in USD and sees no rationale for altering that approach, Matthew Emde, Director General of Funds Management at the Canadian Department of Finance, told Econostream.

He pointed to the US dollar’s roughly 70% share of Canada’s reserve portfolio and the unparalleled depth and liquidity of the US Treasury market as decisive pillars underpinning that strategy. The currency’s centrality to Ottawa’s funding framework is such that, when asked whether issuance in euros, sterling or yen might be considered should relative funding costs shift, Emde said this was “not a key consideration.”

Pressed on whether Canada’s long-standing assumption that the dollar would remain its dominant funding and stress currency had changed in light of recent developments, Emde was unequivocal: “That assumption has not changed.”

For other sovereigns worldwide, the dollar does not occupy such a central position, but nor has its recent slide prompted reassessment. DMOs consulted in recent interviews agree that the greenback serves as a complementary or tactical funding channel rather than a core pillar — and officials stressed that even this more limited role remains unchanged despite recent currency moves.

Poland, whose Director of the Public Debt Department Karol Czarnecki described the US dollar as a “supplementary” currency, is still considering a USD transaction this year.

Czarnecki characterized USD issuance primarily as a means of diversifying the investor base for Polish debt and said he did not expect recent developments to materially alter the currency composition of the country’s portfolio.

Similarly, Slovenia’s Director General of the Treasury, Marjan Divjak, said exchange-rate movements affect USD issuance decisions only “to a certain extent.” The US dollar market continues to offer depth and liquidity, he noted, and Slovenia’s “strategic objective” remains to access that market periodically, subject to favorable conditions.

Still, the dollar’s weakness has not gone entirely unnoticed in Europe’s debt issuance circles. Another senior DMO head, speaking on background, stressed the importance of reinforcing the euro’s international standing and argued that advancing proposals for a common European risk-free asset would contribute.

Such remarks highlight a broader strategic debate, but they have yet to translate into operational changes, with sovereign debt managers showing no sign of revising their reliance on the US dollar in their funding frameworks.