Appetite for US Dollar Swaps Declines as Worldwide Risks Subside
Dollar Demand Declines Amid US-Iran Ceasefire
Recent trends in the $9.5 trillion global foreign exchange market indicate a drop in demand for the US dollar, coinciding with the fragile truce between the United States and Iran. Data from cross-currency basis swaps—which reflect the additional cost or benefit of obtaining dollars abroad rather than domestically—reveal a consistent decrease in interest for the dollar, especially when compared to the euro and Swiss franc.
Nathan Thooft, a senior portfolio manager at Manulife Investment Management, commented, "This represents a straightforward unwinding of previous dollar positions. The dollar had been one of the few assets to gain during the height of the crisis, but that trend is now reversing."
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