Goldman Sachs believes that currency coin Hedging will accelerate the fall of the US dollar

According to Bloomberg, Richard Chambers, the global manager of Goldman Sachs Group’s repo deals, said that the dollar could extend its worst start of the year as foreign investors ramp up their coin hedging efforts. “We do expect the forexHedging ratio to rise, given the increased volatility,” Chambers said at an event hosted by the International Swaps & Derivatives Association in New York.

Qian Bos is also the co-head of the bank’s short-term macro trading. ‘We believe that compared to about 12 months ago, the dollar weakening, forex Hedging ratio rise, and factors such as future purchase of US Treasury bonds in the form of forex Hedging will become more common.’

The Bloomberg Dollar Index has fallen more than 8% this year, marking its worst start on record, as President Donald Trump’s erratic policies have disrupted global markets and shaken investor confidence. Over the past decade, foreign holdings of US securities (including stocks, government bonds, and corporate bonds) have doubled to $31 trillion.

So far, there is little sign that overseas investors are withdrawing massively from the US bond market. However, Qian Bosi predicts that future overseas demand will weaken. This is because as European countries increase fiscal borrowing and spending, the euro’s market position as an alternative reserve coin will be further strengthened, and European investors may choose to stay in the domestic market.