The US dollar no longer shelters investors from market storms. Deutsche Bank estimates that the American currency has lost its safe‑haven status in the age of artificial intelligence. Now, during any correction in the technology sector, the dollar falls in tandem with Big Tech shares.
The bank’s chief FX strategist, George Saravelos, warns that the US economy has entered an unprecedented dependence on foreign capital. Inflows into the equity market today fully cover the US current account deficit. He says that of the roughly $20 trillion of US securities held by foreigners, about 90% of that paper value reflects inflated market prices rather than fresh cash inflows.
Over the past decade, foreign investors largely stopped hedging currency risk. They became used to the pattern in which a decline in equity indices could be offset by a rally in the US dollar. That rule is now broken. If a shock originates within US markets, the dollar weakens alongside stocks. Foreign holders, therefore, suffer losses twice over, prompting panic selling and broad hedging across US assets.
Deutsche Bank notes that falling real yields on US Treasuries only underscore the new trend. Investors should remove their rose‑tinted glasses: the risks to the US currency are now materially higher than Wall Street has priced in over recent weeks.
