The US is increasingly indebted to the rest of the world, fomenting financial risks and leaving the dollar prone to a selloff.
America’s currency has started this year on a strong footing, continuing from 2024 when Donald Trump’s election victory catapulted the DXY index 8% higher in a little over three months. But US exceptionalism and its “exorbitant privilege” – the advantage of having the world’s reserve currency – is leaving the structural underpinning of a strong dollar on more unstable ground.