What happened to the dollar though?

The U.S. dollar has been quietly but steadily weakening and for people like us who spend our days scrupulously watching every twitch in the markets, it’s beginning to feel like something larger is afoot. The dollar has slid almost 9 percent since the start of this year, and, while sometimes numbers can seem abstract or technical, this change is meaningful. It’s a reflection of something deeper, how the world is feeling about America’s role in the global economy.

Trust is a big part of the problem. There have been policy actions over the last few months that have left investors around the world jittery. Trade and taxes are handled in such a way by the current administration that the future can feel uncertain.

There’s discussion of a new tax on foreigners who invest in U.S. assets, and even if it never becomes law, the concept alone is enough to spook global players. When people fret about what’s coming, they often divert their money elsewhere. That’s exactly what appears to be happening.

What’s different this time is that even long term investors, big ones like pension funds have started to protect against what could be the dollar’s further decline. It’s not just a reaction to one bad week. They’re bracing for potentially a larger, longer shift. April should be a wake up call when U.S. stocks, bonds and the dollar fall together. That shook a lot of confidence.

But in markets, nothing ever is simple or forever. If American companies prosper more rapidly than others and if markets and economies rebound, people may come back to the dollar. But at the moment, most of them are looking elsewhere. Maybe it isn’t all in the numbers, the politics. Perhaps it’s about how the world feels, when it looks at the United States and asks itself, indispensable to what? That one, more than any other, may help explain why the dollar is having so much trouble.

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