U.S. politicians may have side-stepped a debt default at the 11th eleventh hour on Wednesday, but currency analysts have told CNBC that the dollar's status as a reserve currency will suffer long-term damage from the impasse.
"I think it's part of the demise of the dollar as an international reserve currency," Chris Watling, CEO of Longview Economics, said of the U.S. government's political impasse. Alasdair MacLeod, head of research at GoldMoney Foundation, agreed saying the dollar's credibility has taken a "very, very bad hit".
Ratings agency Fitch was equally bearish on Tuesday, indicating that the prolonged negotiations over raising the debt ceiling "risked undermining confidence in the role of the U.S. dollar as the preeminent global reserve currency" as it put the U.S. government's AAA credit rating on "rating watch negative".
Talk about the dollar's diminishing role as reserve currency has been doing the rounds for several years. Analysts have pointed to other global currencies like the Swiss franc, the Japanese yen and the Chinese yuan as potential contenders for the role. Analysts have previously indicated to CNBC if the dollar loses status as the world's most reliable currency, the United States will lose the right to print money to pay its debt and could be forced to pay this debt.
(Read More: Is the Dollar Dying? Why US Currency Is in Danger)
International Monetary Fund (IMF) statistics at the start of the year indicated that the Japanese yen, Swiss franc and what the IMF classifies as "other currencies" such as the Chinese yuan were gaining on the dollar in terms of allocated foreign exchange holdings by the world's central banks. But the trend seems to have leveled off in the latest data for the second of 2013 with the dollar constituting $3.76 trillion, or 61.9 percent, of the $6 trillion in allocated foreign exchange holdings, up from 61.5 percent at the same time last year.
But if the change is yet to be seen in the data, the rhetoric has certainly increased. With just days to go before the United States debt default deadline, Beijing aired its frustrations on Sunday with the U.S. shutdown, saying it was time to consider a "de-Americanized" world order in a stinging op-ed article by state news agency, Xinhua.