The Reserve Bank of Australia published remarks by Deputy Governor Andrew Hauser for a panel at the 2026 US Monetary Policy Forum assessing whether the US dollar’s safe-haven role is under threat. He concluded that recent developments in perceived security, risk-off hedging behaviour and market liquidity look more like gradual, uneven change than a decisive break, with the dollar still dominant in scale and usage. US sovereign credit default swap pricing rose around April 2025’s tariff announcements and a later government shutdown, and Moody’s cut the US rating from AAA, but spreads subsequently fell back towards longer-term averages. The dollar also failed to provide a consistent hedge in some recent risk-off episodes, yet the remarks stressed that it has never been a uniform hedge across shocks and tends to appreciate most reliably in funding-stress events, including after recent attacks on Iran. On liquidity, proxies for the US Treasury “convenience yield” weakened in 2025 but broadly extended a longer-running trend, while the depth of US foreign exchange and Treasury markets and Federal Reserve backstop tools were cited as supporting resilience. IMF data were cited as showing official reserves continuing to diversify away from the US dollar mainly into gold and non-traditional currencies, with the OMFIF survey pointing to scope for further diversification even as reserve managers still rate the dollar as the safest and most liquid major currency. Foreign investors nevertheless remain net buyers of US assets, and flows into Australia were described as broadly similar to earlier years. One “important change” highlighted was that the past year’s pickup in portfolio inflows into the United States largely reflected equity rather than debt purchases, a shift linked to higher reported hedging by some pension and fund investors and to valuation-driven changes in the United States’ net international investment position that could affect the mechanics of “exorbitant privilege”.

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