Summary

The dollar, the world's dominant currency, has been in hot demand since the start of the pandemic. On a worldwide trade-weighted basis, the greenback is up 11% since January 2020; compared to a basket of emerging market currencies, it has surged 14%. Indeed, when global uncertainty increases, investor seek a safe haven for assets. That trend has started to unwind a bit in 2025. Year-to-date, the dollar has given back 3% against the worldwide index and 5% compared to an index of advanced economy currencies. Some of the slide can be linked to the economic uncertainty caused by President Trump's trade and tariff policies, though reasons also include the swelling U.S. federal debt, which is not a new trend. Sovereign wealth funds are thus rethinking their commitment to U.S. assets as the cost of doing business in America increases and the balance sheet strains. But we would hesitate to term the dollar at risk of losing its status as the global currency of choice. Even with the pullback this year, the dollar is 18% above its 20-year average value. The greenback is supported by the depth of a $27 trillion market, not to mention by the Federal Reserve and by the country's time-tested political/economic system of democratic capitalism. The alternatives (the euro, yen or yuan) have their issues as well. For several reasons, we anticipate a relatively stab