TREE NEWS reports: Standard Chartered says Federal Reserve Chair Kevin Warsh may have removed the biggest obstacle to buying the dollar while creating the biggest obstacle to selling it. The prior barrier to buying was currency-debasement concerns; the barrier to selling was that nominal and real rate differentials made the dollar unattractive as a funding currency, keeping hedging costs high for dollar-asset holders. Warsh may have cut resistance to short-term dollar gains, as the FOMC’s 25-basis-point rate hike reassured markets about chasing higher yields and raised hedging costs.
Standard Chartered: Fed Chair Warsh May Have Created a Barrier to Selling the Dollar
The notable shift here is structural rather than directional: Standard Chartered is arguing that the two-way barriers around the dollar have flipped, with debasement worries no longer the main check on buying and hedging costs now the main check on selling. That matters most for dollar-asset holders weighing hedges and for anyone using the dollar as a funding currency, since the FOMC's hike changes the cost calculus on both sides. Whether the higher hedging cost genuinely deters selling, or simply gets absorbed, is the open question.
Generated by AI for reference only.
Share on WeChat
Open WeChat → Scan → then tap "…" to send to a chat or Moments.
Tap "…" in the top-right corner to send to a chat or share to Moments.