The US Dollar Index’s 9 percent fall in the first four months of 2025 was its worst performance in 52 years. The month following “Liberation Day” saw a spectacular 4 percent slide in the world’s reserve currency.
The greenback lost its traditional role as a safe-haven currency even as tariff angst triggered a spectacular fall in global stock markets and risk assets.
The Volatility Index rose as high as 60 and a trillion-dollar basis trade gone horribly wrong debilitated the US Treasury bond market, unnerving foreign central banks which view the US dollar and Uncle Sam’s IOUs as a primary reserve asset.
April 2025 was thus a game-changer event in the international monetary regime. Nineteen trillion dollars in foreign-owned assets are now scrambling to reduce their exposure to President Trump’s erratic policy cocktail of trade protectionism, economic nationalism and geopolitical isolationism.
