Ing report warns dollar’s safe‑haven aura is fading
The U.S. dollar has surrendered part of its traditional crisis‑hedge appeal since 2024, according to a fresh ING study, even as global investors broadly continue to hold dollar assets. The bank’s research, released on Monday, concludes that the shift looks cyclical rather than a permanent loss of status, with no clear sign that the world is rushing to abandon the greenback in reserves, trade invoicing, or cross‑border finance.
The report lands after a punishing stretch for the currency. The dollar index fell close to 10% in 2025, its sharpest annual drop since 2017, as policy unpredictability from Washington, tariff threats against allies, and repeated attacks on the Federal Reserve undermined confidence. ING notes that the dollar has also struggled to regain ground in early 2026, failing to rally even as U.S. data showed robust growth, including annualized GDP expanding above 4%, which in past cycles would have drawn in safe‑haven demand.
To quantify the erosion, ING examined three‑month correlations between the dollar index, U.S. equity markets, and 10‑year Treasury yields, a framework that usually shows investors buying dollars when risk assets fall. By this measure the currency now behaves less like a classic refuge during bouts of market stress than it did in 2024, with the bank concluding the dollar has “lost a chunk” of its safe‑haven value, even if it remains the world’s dominant benchmark and reserve unit.
Private capital flows are central to the bank’s relatively measured tone. More than four‑fifths of foreign holdings of U.S. assets are in private hands, and ING says those investors have largely stayed put despite political noise and weaker performance, signaling that long‑term allocations to dollar markets have not yet cracked. Even so, currency strategists point to episodes such as January’s “sell America” wave, when headlines around tariffs and institutions triggered abrupt selling, as evidence that trust is easier to dent than to rebuild.
The most sensitive pressure point, in ING’s view, is the Federal Reserve. The bank describes Fed independence as a cornerstone of the dollar’s safe‑haven status and warns that any perception of politically driven rate cuts or direct interference could spark a rapid reassessment of the currency. Market unease has already been stoked by high‑profile attacks on the central bank and scrutiny from other branches of government, developments that traders say have added a policy‑risk premium to the greenback.
Despite the bruising, ING’s baseline projections do not foresee a repeat of last year’s steep slide. The bank expects the euro to strengthen but only gradually, forecasting the single currency near 1.22 dollars by the end of 2026 from around 1.18 currently, as investors diversify but stop short of a wholesale rotation away from the United States. For now, the dollar’s future hinges less on dramatic de‑dollarization than on whether Washington can calm trade tensions and reassure investors that its central bank will remain insulated from political pressure.
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