Unhedged The dilapidated dollar
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Jul 3, 2025 Ian Smith, a senior markets reporter at the Financial Times, joins for a lively discussion on the dollar's struggle this year, marking its worst performance since 1973. They delve into the surprising impacts of trade policies on investor confidence and the shifting attitudes towards currency hedging. The conversation also touches on the U.S. national debt and its effect on monetary credibility. Plus, they explore market fluctuations, rising fuel prices, and even share their intriguing thoughts on forensic accountants and wealthy tennis players.
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US Dollar's Unexpected Decline
- The US dollar has dropped about 10% in 2025, its worst start since 1973.
- Tariffs raised inflation fears but actual growth concerns have weakened the dollar instead.
Reappraising Dollar Trust
- Investors doubt the dollar’s reliability as a reserve currency amid chaotic US policies.
- This fuels reassessment of dollar exposure and a shift toward other currencies.
Hedge Dollar Currency Risk
- Investors should hedge US dollar risk when owning US stocks abroad to avoid currency losses.
- Increasing hedging can actually accelerate the dollar’s decline through a snowball effect.