Latest news with #StephenJen
Economic Times
09-05-2025
- Business
- Economic Times
Market veteran warns of impending currency avalanche with U.S. Dollar at risk after a week of global financial shockwaves
A market expert warns of a possible dollar crash. Stephen Jen, Eurizon SLJ Capital CEO, predicts a dollar 'avalanche'. Asian currencies' surge signals a wider dollar sell-off. Geopolitical trends and interest rates may trigger US trading partners to dump dollar assets. China and Taiwan hold $2.5 trillion in at-risk dollar assets. Tired of too many ads? Remove Ads Dollar "Avalanche" Tired of too many ads? Remove Ads Dollar Index Dips Sharply in 2025 FAQs A market veteran is sounding dire warnings about the US dollar's susceptibility after a week of dramatic swings in the world's currency markets, as per a Jen, Eurizon SLJ Capital CEO and co-CIO, has long been issuing warnings about the threat of an abrupt and disorderly weakening of the dollar, which he compared to an "avalanche," as per a Market Watch worst nightmare seems to be coming true. In a recent report, Jen and co-author Joana Freire noted the dramatic surge in the Taiwan dollar and other Asian currencies as one of the potential indicators of a wider sell-off in the dollar, according to Market wrote 'We continue to believe the risks of investors being blind-sided by such a non-linear sell-off in the dollar continue to rise. The sharp sell-off in [the Taiwan dollar] last week is such an example. There will be others, we predict,' quoted Market and Freire also pointed out that the changing geopolitical trends and interest-rate spreads may lead US trading partners to start dumping the huge stockpiles of dollar and dollar-denominated assets they have amassed since the onset of the COVID-19 pandemic, reported Market to their calculations, the amount of at-risk dollars held by China, Taiwan, Malaysia, Vietnam and other major Asian exporters is about $2.5 trillion, a tally that has recently been rising by about $500 billion a year, reported Market worry is aggravated by the fact that the dollar has been overvalued for a while now, and Jen cautions that if the dollar keeps depreciating, foreign US asset holders can liquidate and withdraw their funds, as per the report. From the start of this year, the US Dollar Index, which monitors the value of the dollar relative to a basket of major currencies, has already dropped over 8%, touching a three-year low, reported Market estimated that countries like China and Taiwan hold about $2.5 trillion in potentially at-risk US dollar US Dollar Index is down more than 8% this year and hit a three-year low recently.
Yahoo
09-05-2025
- Business
- Yahoo
Global Shift to Bypass the Dollar Is Gaining Momentum in Asia
(Bloomberg) -- Banks and brokers are seeing rising demand for currency derivatives that bypass the dollar, as trade tensions add a sense of urgency to a years-long shift away from the greenback. Is Trump's Plan to Reopen the Notorious Alcatraz Prison Realistic? As Trump Reshapes Housing Policy, Renters Face Rollback of Rights Vail to Borrow Muni Debt to Ease Ski Resort Town Housing Crunch NYC Warns of 17% Drop in Foreign Tourists Due to Trump Policies LA Mayor Credits Trump on Fire Aid, Stays Wary on Immigration Firms are receiving more requests for transactions including hedges that sidestep the dollar and involve currencies such as the yuan, the Hong Kong dollar, the Emirati dirham and the euro. There's also demand for yuan-denominated loans, and a bank in Indonesia is setting up a desk for the Chinese currency. The vast majority of foreign-exchange trades use the dollar even if they're transferring money between two local currencies. For example, an Egyptian company wanting Philippine pesos will typically transfer its local currency into the greenback before buying pesos with the dollars it receives. But companies are increasingly looking at strategies that skip the dollar's role as a go-between. The attempt to find alternatives is another sign that companies and investors are turning their backs on the world's reserve currency, which was hit with a wave of selling this week amid shifting bets on trade deals. Stephen Jen, a high-profile strategist known for his work on the 'dollar smile' theory, has warned of a potential $2.5 trillion 'avalanche' of dollar selling that could derail the currency's long-term appeal. The greenback's tumble this week reflected short-term anxieties about trade tensions that are now dominating sentiment. But structural changes in how the greenback is used — and by whom — point to a longer term trend of de-dollarization. 'The increase in transactions between non-US currencies is largely due to technological development and increased liquidity,' said Gene Ma, head of China research at the Institute of International Finance. 'The trading parties feel that the price may not be worse than using the US dollar, so transactions naturally pick up.' Peak Dollar The attempt to bypass the dollar is picking up steam, based on conversations with employees of companies and financial institutions across Asia, who asked not to be identified as they aren't allowed to comment publicly. Financial institutions from Europe and elsewhere are increasingly pitching yuan derivatives that cut out the US currency, said a person at a commodities trading firm in Singapore. Closer commercial ties between mainland China, Indonesia and the Gulf are spurring demand for non-dollar hedges, several people said. European carmakers are driving up demand for euro-yuan hedges, said a trader at a financial institution in Singapore. In Indonesia, a foreign bank is due to set up a dedicated team in Jakarta this year to meet growing demand from local clients to facilitate rupiah-yuan transactions, according to an executive at the firm. The gradual shift away from the dollar erodes one of the building blocks of global trade. For decades, it has been ubiquitous in everything from emerging market debt financing to trade settlement. The use of the dollar as a go-between currency accounts for around 13% of its daily trading volumes, according to a recent estimate. But global use of the dollar was under threat even before US President Donald Trump's unpredictable approach to trade forced a radical rethink about the greenback's place in the world. China has for years been trying to promote international use of its own currency, signing currency settlement agreements with Brazil, Indonesia and others and promoting the global use of the yuan. The BRICS group of emerging-market nations has discussed de-dollarization. Russia's invasion of Ukraine in 2022 spurred interest among some countries in shifting away from the dollar, after sanctions on Moscow raised questions about whether the currency had become weaponized. To be sure, few market participants doubt that a move away from the dollar will be anything but a gradual shift. For one thing, there are no realistic candidates to replace it. The use of the euro in global transactions has fallen over the past two years, according to data from data from global payments company Swift, while China's currency remains a novelty for trade not directly involving the world's second-largest economy. China's Trade Anchor China's yuan was used in around 4.1% of global payments in March, according to data from global payments company Swift, a far cry from the dollar's 49% global use. But some of China's payments are being done through its own system, which is growing rapidly. Annual volumes through the Cross-Border Interbank Payment System reached around 175 trillion yuan ($24 trillion) in 2024, a more than 40% year-on-year growth rate, according to its own data. Chinese investors and trading companies used the yuan in a record percentage of their cross-border activities in March. The country's exporters are also speeding up the exchange of dollars into yuan, reversing a previous trend of exporters sitting on dollar revenues amid fears the yuan would weaken. Chinese exports to Southeast Asia have grown more than 80% in the five years to March 2025, while those to the United Arab Emirates and Saudi Arabia more than doubled, according to Bloomberg-compiled data. That far exceeds the rate of growth for the country's exports to the US and the European Union. While yuan-based hedges are often more expensive than those based on the dollar, low interest rates on underlying yuan loans can mean the total cost is still attractive for borrowers. 'You can fund yourself at a third of the cost that you would fund yourself in dollars,' said Alicia Garcia Herrero, chief Asia Pacific economist at Natixis. Still, 'the renminbi has limitations because there's not a lot of liquidity offshore.' The cost of hedging the dollar against major currencies has increased over the past year, with spikes just before the US presidential election in November and again in April. Demand among options traders for hedges against dollar declines has surged. A Bloomberg gauge of the dollar has lost around 6% this year as anxiety about trade tensions have loomed large. The tariff-related dollar swings make clear that it's not just China and other major economies that are chipping away at the dollar's place in the world. Trump has sent mixed signals about the currency, but he has complained about dollar strength and has given a top job to Stephen Miran, an economist who has written about a radical shake-up of the dollar-based world order. Trump's approach to trade, his apparent willingness to jettison longstanding practices and his repeated criticisms of the Federal Reserve have all added to a sense that the dollar's dominant role in the global economy is facing its biggest threat in decades. 'Given the dollar's remarkable staying power, it would appear to require truly epochal shifts in the international environment to displace it,' wrote Deutsche Bank analysts including Oliver Harvey in a recent note. 'But there are growing risks that just such shifts are taking place.' --With assistance from Bhaskar Dutta. (Adds context on dollar decline this year. An earlier update corrected a currency conversion.) US Border Towns Are Being Ravaged by Canada's Furious Boycott Maybe AI Slop Is Killing the Internet, After All Pre-Tariff Car Buying Frenzy Leaves Americans With a Big Debt Problem What the US Would Lose If Trump Pushes Out Legal Immigrants Made-in-USA Wheelbarrows Promoted by Trump Are Now Made in China ©2025 Bloomberg L.P.
Time of India
08-05-2025
- Business
- Time of India
Market veteran warns of impending currency avalanche with U.S. Dollar at risk after a week of global financial shockwaves
A market veteran is sounding dire warnings about the US dollar's susceptibility after a week of dramatic swings in the world's currency markets, as per a report. Dollar "Avalanche" Stephen Jen, Eurizon SLJ Capital CEO and co-CIO, has long been issuing warnings about the threat of an abrupt and disorderly weakening of the dollar, which he compared to an "avalanche," as per a Market Watch report. #Operation Sindoor Live Updates| From Sindoor to showdown? Track Indo-Pak conflict as it unfolds India hits Lahore's Air Defence Radars in proportionate response Pakistan tried to hit military targets in these 15 Indian cities, New Delhi thwarts strikes Jen's worst nightmare seems to be coming true. In a recent report, Jen and co-author Joana Freire noted the dramatic surge in the Taiwan dollar and other Asian currencies as one of the potential indicators of a wider sell-off in the dollar, according to Market Watch. Continue to video 5 5 Next Stay Playback speed 1x Normal Back 0.25x 0.5x 1x Normal 1.5x 2x 5 5 / Skip Ads by by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Belly Fat Removal Without Surgery in Algeria: The Price Might Surprise You Belly Fat Removal | Search Ads Get Info They wrote 'We continue to believe the risks of investors being blind-sided by such a non-linear sell-off in the dollar continue to rise. The sharp sell-off in [the Taiwan dollar] last week is such an example. There will be others, we predict,' quoted Market Watch. Jen and Freire also pointed out that the changing geopolitical trends and interest-rate spreads may lead US trading partners to start dumping the huge stockpiles of dollar and dollar-denominated assets they have amassed since the onset of the COVID-19 pandemic, reported Market Watch. Live Events According to their calculations, the amount of at-risk dollars held by China, Taiwan, Malaysia, Vietnam and other major Asian exporters is about $2.5 trillion, a tally that has recently been rising by about $500 billion a year, reported Market Watch. Dollar Index Dips Sharply in 2025 The worry is aggravated by the fact that the dollar has been overvalued for a while now, and Jen cautions that if the dollar keeps depreciating, foreign US asset holders can liquidate and withdraw their funds, as per the report. From the start of this year, the US Dollar Index, which monitors the value of the dollar relative to a basket of major currencies, has already dropped over 8%, touching a three-year low, reported Market Watch. FAQs How much dollar risk is out there globally? Experts estimated that countries like China and Taiwan hold about $2.5 trillion in potentially at-risk US dollar assets. How is the dollar performing right now? The US Dollar Index is down more than 8% this year and hit a three-year low recently.
Free Malaysia Today
07-05-2025
- Business
- Free Malaysia Today
Dollar faces US$2.5tril ‘avalanche' of Asian sales
Bloomberg's US dollar gauge has dropped about 8% from a February high and all Asian currencies have strengthened in the past one month. (Freepik pic) NEW YORK : The US dollar may face a US$2.5 trillion 'avalanche' of selling as Asian countries unwind their stockpile of the world's reserve currency, according to Stephen Jen. 'Asian exporters and investors may have amassed an 'extremely large' pile of dollars through the years, widening the region's trade surplus with the US,' Eurizon SLJ Capital's Jen and Joana Freire wrote in a note today. As a US-led trade war deepens, some Asian investors might repatriate chunks of funds or ramp up levels of protection against a weakening dollar, potentially triggering an exodus from the world's reserve currency. 'We suspect these dollar hoardings by Asian exporters and institutional investors may be extremely large – possibly on the order of US$2.5 trillion or so – and pose sharp downside risks to the dollar vis-à-vis these Asian currencies,' Jen and Freire wrote. The greenback's long-term appeal is coming under threat as Donald Trump's efforts to remake the global trade order prompt investors to reconsider their US exceptionalism trade strategies. An outsized jump in the Taiwan dollar on Monday added to speculation that Asia's policymakers may be prepared to let their currencies appreciate versus the dollar as part of efforts to secure a trade deal with the US. Bloomberg's dollar gauge has dropped about 8% from a February high and all Asian currencies have strengthened versus the greenback in the past one month. Jen, known for his work on the 'dollar smile' theory, had previously said about US$1 trillion could flow back to the world's number 2 economy as Chinese companies sell their dollar-denominated assets when the Federal Reserve cuts interest rates. 'Accelerating the multi-trillion dollar flows may be 'naked long-dollar positions' prevalent among Asian countries that run large external surpluses,' he wrote, referring to positions that are not hedged against fluctuations in the dollar. Some of these countries include China, Taiwan, Malaysia and Vietnam. There is an 'important imbalance in the world that puts the dollar in a vulnerable position,' Jen wrote in the latest report.
Straits Times
07-05-2025
- Business
- Straits Times
US dollar exodus to unleash $3.2 trillion ‘avalanche' of selling, currency analyst says
As a US-led trade war deepens, some Asian investors might repatriate chunks of funds or ramp up levels of protection against a weakening dollar. PHOTO: REUTERS US dollar exodus to unleash $3.2 trillion 'avalanche' of selling, currency analyst says Singapore - The US dollar may face a US$2.5 trillion (S$3.2 trillion) 'avalanche' of selling as Asian countries unwind their stockpile of the world's reserve currency, according to currency analyst Stephen Jen. Asian exporters and investors may have amassed an 'extremely large' pile of dollars through the years, widening the region's trade surplus with the United States, Eurizon SLJ Capital's Mr Jen and Ms Joana Freire wrote in a note on May 7. As a US-led trade war deepens, some Asian investors might repatriate chunks of funds or ramp up levels of protection against a weakening dollar – potentially triggering an exodus from the world's reserve currency. 'We suspect these dollar hoardings by Asian exporters and institutional investors may be extremely large – possibly on the order of US$2.5 trillion or so – and pose sharp downside risks to the dollar vis-à-vis these Asian currencies,' they wrote. The greenback's long-term appeal is coming under threat as Donald Trump's efforts to remake the global trade order prompt investors to reconsider their US exceptionalism trade strategies. An outsized jump in the Taiwan dollar on May 5 added to speculation that Asia's policymakers may be prepared to let their currencies appreciate versus the dollar as part of efforts to secure a trade deal with the US. Bloomberg's dollar gauge has dropped about 8 per cent from a February high and all Asian currencies have strengthened versus the greenback in the past one month. Mr Jen, known for his work on the 'dollar smile' theory, had previously said about US$1 trillion could flow back to the world's No. 2 economy as Chinese companies sell their dollar-denominated assets when the Federal Reserve cuts interest rates. Accelerating the multi-trillion dollar flows may be 'naked long-dollar positions' prevalent among Asian countries that run large external surpluses, he wrote, referring to positions that are not hedged against fluctuations in the dollar. Some of these countries include China, Taiwan, Malaysia and Vietnam. There is an 'important imbalance in the world that puts the dollar in a vulnerable position,' Mr Jen wrote in the latest report. BLOOMBERG Join ST's Telegram channel and get the latest breaking news delivered to you.
