US dollar’s haven status under threat, fund managers warn

Unlock the editor’s digest in free

FT editor Raula Khalaf selected his favorite stories in this weekly newsletter.

The US dollar position as a shelter for global capital can be threatened by involuntary policy -making and increasing trade barriers, fund directors warned.

On Friday, President Donald Trump declared a steep “mutual” tariff on US business partners, extending a slide that began last week and down three years against the Euro.

These steps were alarming among investors who warned about a “tectonic shift” for the global economy if shelter could not be relied on shelter during the dollar and market instability.

“There is 1744442112 Bob Michelle, chief investment officer of the JPMaragan Asset Management, said that the US dollar exceptionalism ended, including $ 3.6TN under management.

Over the decades, the relative stability of the US economy is held by central banks around the world – allowed the dollar to work as a reserve currency in the world.

It has allowed the United States to take the orrow in the current account of the country and its official budget and the “double deficit” finance.

Money managers have said that in recent days equity, bonds and dollars simultaneous sales-affair, encouraged by the President’s aggressive trade agenda, indicating the loss of faith in US property among international investors, money managers said.

“Trump’s chaotic duty policy undermines the US position as a safe shelter,” Germany’s largest independent asset manager, Bart Flbsch, co-founder and chief investment officer of Flbsch von Starch, said.

“Of course there is a possibility that the increase in policy uncertainty in the United States may change the use of dollars in the global economy,” Brad Setsers said the Council of Foreign Relations Council.

Edward Fishman, the writer ChokpointsA book on the US Economic War says that in addition to Trump’s tariff, the president’s threat to the rule of law and the freedom of the Fed could also damage the dollar.

He predicted that over time it could be transferred to a “multi-polar” system where the coins, including the Euro, played a bigger role.

The dollar is especially unusual because global financial pressure usually strengthens the currency, as investors rush to US Treasury bonds to the dollar’s assets that are considered a shelter.

Economists also said that the currency of any country that imposed import duty was expected to be stronger.

Mike Redell, a fixed income portfolio manager at the Feedback International, says the recent sharp steps in the long-level official bond yield of America’s weak US dollars look like “good old capital aircraft”.

However, the US President’s economic advisers emphasized the cost of bringing strong dollars in the past.

Stephen Miran, chairman of Trump’s Council of Economic Advisors, argued before the inauguration of the President that the dollar position as a World Reserve Currency artificially inflamed the exchange rate in the United States production worldwide.

Economists have argued about Miran’s argument and raised concerns that his argument could lead the Trump administration to take further steps to disappoint the dollar value.

Michael Crutzberger, the Global CIO of the Allianz Global Investors, says: “The more the conflict is, the people think, what can the next steps be?”