
Amid the market’s abrupt turn away from the “American Exceptionalism” narrative, Stephen Jen's latest client letter delivers a sharp and timely perspective on the dollar’s path. He dismantles the idea that tariffs inherently boost the greenback, and argues instead that a correction was both overdue and justified, independent of any trade war.
Jen also clarifies what this dollar decline is not: it is not the end of the USD’s global dominance. Much like the English language, dollar hegemony is sticky and deeply embedded. But what we are seeing, he argues, is a healthy, even fair, 15–20% reset in valuation, one that exposes the limits of fiscal overreach and the risks of mispriced consensus.
Key Quote
“The dollar can weaken cyclically without losing its hegemonic status… A 15–20 percent correction is not only normal but actually fair.”
Table of Contents
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Tariffs and the dollar
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Dollar hegemony is here to stay
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The Triffin Dilemma and the dollar
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Stagflation and the Dollar Smile
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Bottom line
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