La global uncertainty regarding the dollar It has become one of the major driving forces of the international economy: abrupt movements in exchange rates, geopolitical tensions, trade wars, changes in monetary policy and capital flows entering and leaving countries at high speed are painting a very different picture than just a decade ago.
All of this occurs in a context in which The United States remains the axis of Finance systemBut its role is increasingly questioned, while other safe-haven assets such as gold, silver, the Japanese yen, and the Swiss franc gain prominence. At the same time, emerging and advanced economies are trying to adapt to a more fragmented world, with supply chains under review and a weakened multilateralism that adds further layers of uncertainty.
Dollar, tariffs and tensions over Greenland: impact on Latin American currencies
In Chile, the exchange rate has clearly reflected how the Geopolitics can outweigh fundamentals Economic factors. The dollar settled around 892 pesos, rising approximately 0,27% compared to the previous close, despite copper—the main benchmark for the Chilean peso—remaining virtually unchanged on the London Metal Exchange, with the pound hovering around $5,897.
The market reaction was linked, above all, to the offensive by then US President Donald Trump around Greenland. His threats to impose tariffs on countries that did not support Washington's plans for the island heightened the sense of risk among investors and dampened the appetite for assets more exposed to the global cycle.
Tensions increased even further when reports began circulating about a possible European Union response in the form of reprisalsThis dragged down major international stock markets. In this environment, many investors reduced their positions in equities and emerging market currencies, increasing their exposure to dollars and more defensive assets.
At the same time, the Dollar Index, an indicator that measures the evolution of the greenback against a basket of liquid currencies, It turned downwards and fell by around 0,33%. Following the initial gains of the session, this apparent contradiction—the dollar rising against the Chilean peso but weakening against other currencies—illustrates how local movements can be influenced by the specific flows of each market.
Platforms like XTB Latam emphasized that geopolitical-commercial conflict between the United States and EuropeThe threat of new tariffs linked to Greenland triggered a defensive shift in the markets. According to analysts, the perceived risk led investors to adopt a more cautious approach, reinforcing the search for safe havens and creating a complex environment for emerging market currencies.
Local analysts like Felipe Sepúlveda, from Admirals Latinoamérica, highlighted that the behavior of the exchange rate in Chile was explained by a transient decoupling between external foundations and local flowsAlthough copper remained at relatively solid levels—something that, under normal conditions, would have supported the Chilean peso—the demand for dollars in the domestic market and sensitivity to international noise ultimately prevailed.
According to this interpretation, the boost from copper was not enough to offset a significant increase in the search for dollar hedging at the local levelIn an environment of very high global noise, the result was a rise in the exchange rate that responded not so much to the specific commodity price data, but to the confluence of internal flows and a perception of geopolitical risk.
Paraguayan guaranÃ, weak dollar, and central bank interventions
One striking case in the region has been that of Paraguay, where the The dollar sank to its lowest level in about 15 years, trading in the retail market between 6.500 and 6.700 guaranÃes, about 15% below the level of a year ago in comparable terms.
This drop in the exchange rate against the guaranà has ​​had mixed effects: on the one hand, it has helped to to contain inflation and lower dollar-denominated debts This benefits families and businesses, as obligations denominated in US dollars become less expensive when converted to local currency. Furthermore, imported goods become less expensive, limiting the cost pass-through to the end consumer.
On the other hand, the export sector has suffered a deterioration of its marginsbecause they receive fewer guaranÃes for each dollar of export sales. Sectors such as agriculture or industries geared towards international markets are especially affected when the exchange rate appreciates too much from a local perspective.
Among the factors that explain this decline of the US dollar in Paraguay, the following stand out: geopolitical elements linked to the trade war between the United States and China, tariff policies and unpredictable decisions by the White House on international trade, which have generated recurring episodes of volatility.
The figure of Donald Trump has been a constant focus of uncertainty in the marketsIts unexpected announcements, threats of tariffs on European partners over the Greenland issue, and abrupt changes in strategy have complicated any attempt to chart a clear path for the dollar in the medium term, according to numerous international analysts.
Domestically, the president of the Central Bank of Paraguay, Carlos Carvallo, has indicated that the exchange rate evolution It responds primarily to market forcesFurthermore, he noted that the current inflation target reduces the scope for the monetary authority to systematically purchase foreign currency, as such intervention could disrupt price controls.
To date, the Paraguayan Central Bank has only intervened to to contain sharp rises in the dollarAs at the beginning of a recent year, the aim was to avoid sharp inflationary impacts that would damage household purchasing power. However, in recent months a considerable drop in the dollar has been observed, in a context where a significant inflow of foreign currency from agricultural exports was anticipated for March, something that tends to put even more downward pressure on the exchange rate.
The entity has reiterated that it only considers taking action in the foreign exchange market when irregularities are detected. severe mismatches between the exchange rate and the fundamentals of the economyWhether due to internal or external factors, the official position is to maintain a flexible exchange rate that reflects the reality of foreign exchange supply and demand, even in a context of prolonged dollar weakness.
Even so, the Central Bank itself warns that there are seasonal factors that could push the dollar upwards At certain times of the year, mainly due to changes in the dynamics of foreign trade: periods of greater intensity in imports and phases of lower export pace can generate exchange rate tensions in the opposite direction.
International outlook for the dollar and the role of the Federal Reserve
Globally, forecasts from investment banks and large financial institutions paint a nuanced picture: the dollar presents a general trend of weakness against many currenciesbut with the possibility of occasional recoveries if US economic data surprises on the upside or if global risks intensify.
Groups such as Citigroup have indicated that, in the coming years, a [surgence/restructuring/etc.] could occur. gradual appreciation of the greenbackThe recovery would not be abrupt, similar to other historical episodes in which the US dollar regained ground after periods of correction. However, this process would be heavily influenced by the evolution of the Federal Reserve's monetary policy and the geopolitical environment.
At present, the prevailing expectation is that the Fed undertakes interest rate cuts At some point, if the economy requires it, the dollar could be restructured, which in principle would work against it because it reduces the relative attractiveness of assets denominated in that currency. However, if growth and employment data exceed expectations, the market could reassess the trajectory of interest rates and temporarily support the dollar.
The Federal Reserve itself, through some of its officials, has indicated that it must be prepared to cut benchmark interest rates again if the situation requires itespecially if the labor market proves more fragile than the aggregate figures suggest. These statements have been interpreted as a sign that the door to expansionary measures remains open.
Investors, for their part, are paying close attention to key indicators such as the Personal Consumption Expenditures (PCE) price index in the United States, as well as the decisions of other central banks, since the differences in interest rates between countries They condition a large part of the flows towards the dollar and other currencies.
Gold, silver, and safe-haven assets amid uncertainty about the dollar
In this environment of high uncertainty, the assets considered a classic safe haven They have taken center stage. Gold and silver have reached record highs, driven by a veritable flight to safety following renewed threats from Trump to impose additional tariffs on European countries for their stances on Greenland.
Market analysts agree that, as long as high geopolitical tensions and doubts about the behavior of the dollar persist, Precious metals will maintain upside potentialFirms such as FXStreet and Société Générale have highlighted that gold recently emerged from a consolidation phase strongly, opening a new leg of momentum in its price.
Recent reports highlighted that the gold contract on COMEX reached above $4.600 per ounce, after a notable increase in just a few days, marking an all-time high for the session. Silver, meanwhile, also reached record highs, with daily gains exceeding 5% at times.
The start of the year for these metals has been exceptional: gold accumulated increases of more than 5% In just one month, while silver advanced more than 20% in two weeks, on track for one of its best monthly performances since the 1980s. This behavior is explained by a combination of geopolitical crises (in Iran, Venezuela, Greenland and other hotspots) and the expectation that the Fed may be forced to cut rates more aggressively.
Experts like Barbara Lambrecht of Commerzbank point out that the price of gold is supported by the forecast of deeper interest rate cuts in the United States of what the market is currently pricing in. In the case of silver, in addition to its safe-haven status, a very tight market for years and the difficulties in reducing the use of the metal in certain industrial applications are supporting structural demand.
Various analysis teams insist that, despite the increases recorded, there are still no clear signs of exhaustion of the upward trend in gold, as long as the backdrop continues to be dominated by interest rate cuts and latent geopolitical instability.
Japanese yen, dollar and political tensions in Asia and the West
Another key player in this new financial landscape is the Japanese yen, traditional safe-haven currency in times of turbulenceThe USD/JPY pair has been moving around high levels, close to year-and-a-half highs, although with occasional corrections linked to the evolution of domestic politics in Japan and the perception of global risk.
On the Japanese domestic front, speculation is rife about the possibility that Prime Minister Sanae Takaichi Dissolve parliament and call early elections This has generated doubts among investors. The prospect of a victory that would reinforce an expansionary fiscal agenda in a highly indebted country raises fears of further deterioration of public finances.
This scenario tends to weigh on the yen, as some investors believe that a increased fiscal stimulus without a clear monetary adjustment This could devalue the currency in the medium term. Therefore, during periods of intense political rumors, the yen loses traction against the dollar and other currencies.
However, other forces are countering that movement. Finance Minister Satsuki Katayama has reiterated that All options are on the table to curb excessive yen weaknessThis includes direct and coordinated intervention with the United States. Furthermore, some within the Bank of Japan believe an interest rate hike could be brought forward, even to spring, which could support the Japanese currency.
Internationally, the weak risk environment has favored the yen. Trump's new threats to impose 10% tariffs on several European countries for their opposition to its plans on Greenland They rekindled fears of a renewed trade war, reducing appetite for risk assets and strengthening demand for safe-haven currencies such as the yen and the Swiss franc.
Meanwhile, the US dollar retreated after hitting its highest level since early December, pressured by the increased doubts about dollar-denominated assets In a context of political and trade tensions, reduced expectations of interest rate cuts by the Fed have partially limited the decline, but have not prevented a sense of vulnerability.
Markets are still closely watching indicators such as the US PCE and the Bank of Japan's decisions, as small changes in the tone of central banks These can translate into sharp movements in crosses such as USD/JPY, in an environment of high risk sensitivity.
Geopolitical disorder, questioning of multilateralism and the role of the dollar
Beyond specific events, the dollar is moving in a global scenario marked by a profound change in the international rules of the gameThe economic agenda of the new US administration, with its strong inclination towards the aggressive use of tariffs, has called into question the stability of world trade.
The tariff announcements of April 2, 2025, and their subsequent fluctuations showed markets that no scenario, however extreme it may seem, can be ruled out.This includes the possibility of unilateral measures against traditional partners, sudden revisions of agreements, and greater instrumentalization of trade as a tool of geopolitical pressure.
At the same time, the debate on the centrality of the dollar as an international reserve currency and regarding trust in payment systems dominated by US companies. Although the US dollar remains the primary currency for reserves, trade, and financing, a growing number of countries are exploring partial alternatives to reduce their dependence.
The deregulation agenda announced by the United States, especially in sectors such as banking, finance, and energy, has also generated concern. Many observers fear that it could create regulatory asymmetries and competition level problems between jurisdictions, in addition to adding more volatility to a system already strained by geopolitical factors.
This shift is part of a broader retreat of pro-multilateralism narrativesFor about a decade now, enthusiasm for globalization and the rules that emerged after World War II has cooled, both among political elites and large segments of the population.
Events such as the wars in Ukraine and the Middle East, the 2018-2019 trade tensions between the United States and China, the paralysis of the World Trade Organization and other institutions, the United Kingdom's exit from the European Union, or the disruptive effects of the pandemic on supply chains have undermined faith in a fully integrated global system.
In contrast to other historical phases, the current one is characterized by the simultaneous overlap of geopolitical and commercial conflictsPreviously, political clashes often occurred within a context of deepening globalization; today, tensions reinforce each other, further weakening trust in the framework of international cooperation.
The intensity of the impact varies according to the degree of integration of each country into the global economy and the nature of its trade and financial links. Economies highly exposed to global value chains They are especially vulnerable to supply shocks, as seen with the dependence of some European partners on Russian gas after the invasion of Ukraine.
Geopolitical tensions not only disrupt trade, but also raise the macroeconomic uncertaintyThis complicates decision-making for governments, businesses, and households. In periods of high uncertainty, consumption tends to moderate and investment declines more sharply, slowing growth and increasing volatility in financial markets.
Studies such as Caldara and Iacoviello's on geopolitical risk have shown how Shocks of uncertainty can trigger abrupt adjustments of asset prices and spikes in volatility, with transmission channels ranging from capital flows to international trade and credit.
Europe, trade concentration and the search for economic security
The economies of the European Union are deeply intertwined with the rest of the world through trade, finance, and migration, making them especially sensitive to global disruptionsThe high concentration of imports from China and exports to the United States raises concerns in terms of economic security.
Relying heavily on just a few suppliers or markets can become a source of vulnerability This could happen if those partners acquire a dominant position or if political conflicts, sanctions, or logistical blockades arise. Recent experience with energy from Russia has strengthened the arguments in favor of diversifying trade sources and destinations.
Available data suggest that, between 2017 and 2024, world trade as a percentage of GDP remained relatively stable, but a slight increase was observed in the participation in global value chains and in the trade of servicesHowever, geopolitical tensions have prompted a partial reorganization of flows, with Western countries redirecting some of their trade from China and Russia towards partners perceived as more geopolitically aligned.
For the European Union, the trade and tariff decisions of the United States They add an extra level of complexity, since they break with certain traditional alignments and force Brussels to redefine its strategy of strategic autonomy, also in the monetary and financial field.
All of this is happening in parallel with profound changes in the distribution of economic power worldwide, with the rise of new powers and the emergence of multilateral structures alternative to Bretton WoodsIn this context, the dominance of the dollar is being discussed more openly, although for now there is no clear and unique alternative to replace it.
Megatrends, business adaptation and economic resilience
Global uncertainty regarding the dollar and the international financial system cannot be understood apart from a set of Megatrends that are redefining the economy: accelerated technological advancement, demographic changes, the energy transition, climate change, institutional evolution, and new dynamics of global public health.
Technological development—digitalization, automation, artificial intelligence—is transforming production and employmentThis has generated significant efficiency gains but has also displaced certain job profiles and fueled debates about inequality. Some studies suggest that social unrest in advanced economies is more related to these technological shocks than to globalization itself.
In parallel, demographic changes—aging in Europe and other developed regions, rapid population growth in some emerging economies—are reconfiguring savings, investment and public financesThese movements affect the trajectories of long-term interest rates and, consequently, the relative demand for dollar-denominated assets.
The transition to cleaner energy sources and the challenge of climate change require huge investments in infrastructure, technologies and adaptationThis implies new financing needs and alters global capital flows. In this context, the stability of the financial system—and of the dollar as its central anchor—is crucial to preventing crises during the process.
Following the COVID-19 pandemic, global public health has come to occupy a a much more visible place on the economic agendaThe capacity of health systems to withstand shocks, investment in biotechnology, and international cooperation in this field have become variables that influence risk appetite, capital allocation, and ultimately, currency valuations.
In this context, businesses and governments are trying to adapt through various strategies. Many companies are diversifying their supply chains and marketsreducing dependence on a single country or region. This involves, for example, rethinking plant locations, establishing alternative suppliers, and expanding the customer base.
In the public sphere, there is growing interest in policies aimed at relative self-sufficiency in strategic sectorssuch as semiconductors, renewable energy, and certain critical materials. This agenda is combined with more flexible regulatory frameworks and industrial policies that seek to attract investment and strengthen local ecosystems.
A tool increasingly used by companies and institutions is the scenario planningThis allows for anticipating different plausible futures, assessing risks and opportunities, and designing resilience strategies. This includes strengthening infrastructure, digitizing processes, improving cybersecurity, and adopting sustainable practices that reduce exposure to environmental and regulatory risks.
Cooperation between the public and private sectors is proving essential for building more robust economic systems in the face of geopolitical and financial shocksThrough coordinated industrial policies, support for innovation and talent development, the aim is to mitigate the impact of uncertainty and take advantage of the opportunities offered by new technologies and the energy transition.
In this complex web, the dollar continues to occupy a central position, but it is surrounded by more questions than in previous decades. Amid trade tensions, wars, regulatory adjustments, demographic changes, and technological disruptions, the global economy is navigating a period in which diversification, risk management, and institutional resilience They have become essential to navigate an era marked by volatility and a growing questioning of the economic order that revolved almost exclusively around the US dollar.
