The condemned live longer

Since Donald Trump took office and the infamous working paper on the so-called Mar a Lago Accord, it has been said that Trump favors a weak dollar, sometimes Christine Lagarde conjures up a "global euro moment". An end to the dollar as the global reserve currency will not be talked about with pretty words and wishful thinking. An end to the dollar as a reserve currency requires a major loss of confidence among investors and a full-fledged alternative.

However, a devaluation of the dollar does not automatically mean that its status as a reserve currency will come under pressure. When the dollar was last at its current level against the euro at the beginning of 2021, no one was talking about the end of the dollar either. The price of a reserve currency can also fluctuate. Currently, almost 90 percent of all foreign exchange transactions are still in dollars. The share of global currency reserves is also around 50 percent. Incidentally, the second largest position in foreign exchange reserves is no longer the euro, but gold due to current price developments.

The German special fund, new growth expectations throughout Europe, key interest rate cuts in the USA and an ECB that has been keeping its feet still since last summer: these are the reasons behind the dollar's downturn. And they are cyclical, not structural. The frequently heard "Sell America" motif was also discussed more often on the financial markets than it really stood. As long as the US economy grows, the US capital markets are unparalleled and no new reserve currency emerges in the rest of the world, investors will always return to the dollar. However, the same applies here: The trust of the financial markets must be earned again and again. If it is ever permanently damaged, the status of the reserve currency will also crumble. Sterling also remained a reserve currency for decades after the structural foundations had already been eroded.

In the current situation, there are two fundamental dangers for the dollar: an abrupt and harsh end to the AI boom, which calls into question the entire growth model of the US, and political violence in the run-up to the midterm elections in November. In other words, one or more events that cause lasting damage to investor confidence in American institutions and the American economy.

Possible? Yes. Probably? Rather no. Because even if Donald Trump may secretly want a weaker dollar, he will very likely not want to pay the price of a stock market crash for it.

This column was first published in DerTreasurer-Kompakt (issue 4, 2026).