IMF exit would be true dollar shock

The US dollar has suffered its worst start to any year since 1989 as the Trump administration has put forward once unthinkable economic policies, unnerving global investors.

- Mike Dolan

But one proposed shift would be of a different order altogether: an exit by the US from the International Monetary Fund (IMF).

Sweeping global trade barriers, broken alliances and blistering verbal attacks on the US central bank and other federal institutions have taken a toll on what many consider an already overvalued US currency and assets.

In the process, the dollar index has shed 8.4% so far in 2025.

That compounds heavy Wall Street losses for global funds that have driven US markets higher for more than a decade.

Consider that dollar weakness transformed a 6% drop in the S&P 500 index into a 15% hit for unhedged euro-based investors, who would have also seen modest Treasury losses in dollar terms turned into drops of almost 10%.

If nothing else, the fog of uncertainty surrounding Washington has seriously dented the attraction of US Treasuries and the dollar as predictable havens amid global trouble.

But the impact of an IMF exit on the greenback would go far beyond frayed trust or investment rethinks.

That's because this step — openly advocated by the controversial “Project 2025” conservative wish-list for President Donald Trump's second administration — would mechanically unravel overseas dollar reserve holdings.