Analysts warn that the state of Greenback as a reserve currency of the world is being questioned, which can lead to prolonged increases from interest and instability rates of the global market.
In just one week, the dollar has gone from being a safe refuge for the child of investors as the chaotic rates of the president of the United States, Donald Trump, both for friends and Foe, undermine decades of confidence in the world reserve currency.
The sudden loss of confidence was no more marked than in the treasure market, which saw the greatest weekly increase in indebtedness costs since 1982 as funds fled.
“The United States, almost overnight, seems to have lost its safe refuge attributes,” said Ray Attrill, head of FX strategy at the National Australia Bank.
“There is … a loss of confidence to a certain extent … you are overcoming that with the loss of exceptionalism and the opinion that in the short term, at least, it is the American economy that will suffer more than any other than is happening in the rate.”
The dollar, which is already ongoing for its year of sausages since 2017, on Friday for a decade against the Swiss Franc and fell to its weakest level against the euro in more than three years.
“All the premise of the dollar as a reserve currency is being challenged, effective, so we have from Trump’s choice,” said Attrill.
It was the establishment of the Bretton Woods system in 1944 that consolidated the global position of The Greenback. Post -war planners devised a system based on exchange rate stability and the deepening of international trade and the dollar remained dominant equally after Bretton Woods collapsed in the early 1970s.
But recently Trump’s movements in commerce have shaken perceptions. In a matter of days, he has imposed the world management rates, made an abrupt in U of his decision and intensified a commercial war with China, questioning the reliability of the administration of the United States.
The worldwide shares have thrown billions and world markets have entered a tail.
“Regardless of how the next 90 days evolve, the international reputation of the United States has eroded,” said the chief economist of the Anz Group, Richard Yetsenga, in a note.
“The global economy is in a Waker position that before the rates.”
Martin Whetton, head of the financial market strategy at Westpac, said that this week’s massive change in the US exchange of US dollars, the “acute flash-crush” moves higher in the yields of the United States treasure and the strong sale of a strong sale in the dollar showed “a dispossession.”
“Losing or decreasing credibility as a safe financial refuge, the disposition of creditors to lend money to the United States is reduced,” he said.
Things are so bad that the United States now have to pay investors more to borrow their money than Italy, Spain or Greece.
Without a doubt, some believe that the sale of dollars could be temporary.
“Once the uncertainty has left more or less, the rates of rates are established, there is no round trip, we will see that the dollar is strengthened again, it is possible that the rates are established and this is the new as new as langee so.
But even if it is short duration, any erosion of the dollar position as bad news is bad news for investors.
For those who have accumulated billions of dollars in US buoyant markets in recent decades, an acute dollar drop could lead to higher interest rates for a longer time as pressures persist at home, which is bad for bonds and equites.
Foreigners had $ 33 billion of US debt and actions at the end of 2024.
“Trump’s admitted agenda to reform the international financial system seems almost alien to the reality of the extreme United States dependency in foreign capital as reflected in its net international investment position,” said Chris Wood, Global Chief of Equite.
Posted on April 11, 2025
