Behind the US Dollar Decline: Reduced Overseas Hedging by US Investors as a Catalyst

ZkSnarker · 2025-12-18T00:00:09+00:00

Behind the depreciation of the US dollar, some analyses point out that the reason is the reduction of foreign exchange hedging by local US investors for overseas investments, leading to a halving of the hedging ratio, which directly affects the US dollar's trend. Additionally, increased market uncertainty and discussions on de-risking have also contributed to this change.

ZkSnarker

2025-12-18 00:00:09

Abstract generation in progress

【Crypto World】Behind the recent decline of the US dollar, there is a detail that many people have overlooked. According to the head of global foreign exchange sales and trading at State Street Markets, a subsidiary of BNY Mellon, the real driver of the dollar’s depreciation in the first half of this year is not global investors rushing to increase their US asset holdings, but rather domestic US investors adjusting their strategies—they are reducing their foreign exchange hedging for overseas investments.

Does this sound counterintuitive? But the data speaks for itself. This executive revealed at the New York Federal Reserve’s foreign exchange market conference that US domestic investors have cut their hedging ratios in half. This large-scale hedging adjustment has directly put pressure on the dollar. He also mentioned that uncertainties brought by Liberation Day (possibly referring to a political or economic milestone) still exist, and discussions about de-risking have heated up accordingly. In simple terms, when US investors start pulling back from overseas deployments, the dollar naturally weakens.

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ChainComedian

· 2025-12-20 19:53

Americans are fleeing themselves, and you're still expecting the dollar to be so strong? Cutting the hedging ratio in half—this move is definitely sending a signal.

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AirDropMissed

· 2025-12-20 15:22

The Americans are starting to hold back, and this is the real reason for the dollar's weakness... We were all wrong before; it turns out that halving the hedge ratio can cause such a sharp sell-off.

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digital_archaeologist

· 2025-12-18 00:24

The Americans are already starting to withdraw overseas themselves. Can we still expect the dollar to stay strong? Honestly, it's a confidence issue. Halving the hedge indicates that they are also panicking.

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ETH_Maxi_Taxi

· 2025-12-18 00:16

Oh brother, is this logic reversed? Did the Americans shoot themselves in the foot with the dollar? Cutting in half to hedge? Feels like someone is betting on something... Wait, doesn't this mean the Americans are starting to tighten? Is this wave hinting at some risk signals? Is the opportunity to short the dollar coming back?

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GasFeeCry