Concerns about the dollar have intensified, and the demand for hedging against dollar depreciation has surged to a five-year high

ChainCatcher message, due to the Trump administration's tariff policy potentially undermining America's economic exceptionalism and weakening the dollar, the demand for hedging against potential dollar depreciation has surged to a five-year high. Institutional data shows that the three-month risk reversal index measuring the dollar against 12 major currencies (i.e., the spread between call options and put options) has fallen to its lowest level since the peak of the global pandemic in March 2020.

The indicator dropped below zero for the first time in five years last Friday, indicating that the demand for put options benefiting from a weaker dollar exceeds that for call options benefiting from a stronger dollar. "The market's aversion to holding dollars remains dominant," said Chris Weston, head of research at Melbourne's Pepperstone Group Ltd. "The questions people have about the dollar are not just a one-day issue, but rather a potential significant structural change."