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This is not a blip. The dominance of the US dollar is getting eroded
The process is already well under way. From here on, disruptive US economic and foreign policies could accelerate the decline.
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History tells us that currency dominance does not last forever, says the writer.
PHOTO: REUTERS
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Responding to the policy-driven market chaos in the United States, many analysts have, in recent days, been focusing on the fate of the US dollar. The behaviour of the world’s most important currency has, of late, been wayward.
To recap some recent history: During the first week of April, soon after US President Donald Trump announced his so-called “reciprocal tariffs” on the world, equity markets fell. When this happens, market players typically take refuge in US Treasury bonds, which are supposed to be the world’s safest financial assets – but they didn’t. Treasuries sold off as well, pushing their yields higher. Surprisingly, the US dollar, which normally rises in response to higher bond yields, weakened instead, reflecting the waning confidence in US assets.
