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The US Dollar: Not a Traditional Safe Haven
['Yves Smith']
naked capitalism
This column demonstrates that the US dollar differs from that of traditional safe-haven currencies such as the yen and Swiss franc.
There are tentative signs that the dollar has increasingly diverged from the behaviour of traditional safe-haven currencies in recent years.
Episodes of funding stress have triggered global dollar shortages, contributing to dollar appreciation (Jiang et al.
Figure 1 The safe-haven and funding stress factorsNote: Positive values indicate funding stress and safe-haven flows (risk-off).
A safe-haven shock strengthens the dollar temporarily, while the dollar weakens against classical safe-haven currencies.