As dollar slides, the Euro is picking up speed

Investors seek havens amid global turmoil

- ESHE NELSON

The chaotic rollout of President Donald Trump's tariffs has prompted investors to question long-held assumptions about the safety and stability of the US dollar, which has plunged in value this year. In the hunt for alternatives, many have turned to the euro.

The euro has risen more than 11% against the dollar since the start of the year, reaching its highest level in four years, at $1.18. The euro has also gained against other major currencies over that period, including the Japanese yen, British pound, Canadian dollar and South Korean won, suggesting that its strength is more than a reflection of the dollar's weakness.

Christine Lagarde, the president of the European Central Bank, said this moment was an opportunity for the euro to gain global clout.

“We are witnessing a profound shift in the global order: Open markets and multilateral rules are fracturing, and even the dominant role of the US dollar, the cornerstone of the system, is no longer certain,” she wrote last month.

The dollar’s role as the world’s reserve currency gives the United States an “exorbitant privilege” — a term coined begrudgingly by a French politician in the 1960s. Because investors, governments and central banks around the world seek the safe, predictable returns of dollar-denominated assets such as Treasury bonds, there is a robust, builtin demand for dollars.That makes it easier for the US government to borrow and boosts the spending power of American consumers.

The eurozone, which is made up of the 20 countries that use the euro and rivals the United States in terms of size and wealth, has never attracted investors in the same way. The euro ranks a distant second to the dollar in global use.