March 6 - At a policy forum in New York, Reserve Bank of Australia Deputy Governor Andrew Hauser offered a measured assessment of the U.S. dollar's international standing, saying the era of what has been called U.S. "exorbitant privilege" might be eroding, but any meaningful shift appears likely to be slow-moving.
Hauser observed that, despite episodes when the greenback weakened during volatility tied to U.S. trade policy last year, there is scant evidence so far of a sustained decline in the dollar's perceived safety. He underlined this point by pointing to the currency’s renewed appreciation following recent attacks on Iran, and the broader safe-haven rally that accompanied the Middle East conflict earlier in the week.
"While the events of 2025 could be a sign that things have changed, what we saw was far from unique. It is surely noteworthy that the dollar did appreciate following the recent attacks on Iran," Hauser said. "In truth, the dollar has never been a perfect hedge for all risk-off events, appreciating most persistently during periods of funding stress associated with strong demand for the currency."
Hauser also addressed investor behavior toward U.S. assets. He noted that foreigners remain substantial buyers of U.S. securities, responding to narratives in media and commentary suggesting an exodus from U.S. investments toward alternatives, including Australia. In his view, capital flows into Australia have broadly tracked levels seen in previous years.
Still, Hauser flagged an important change in the composition of capital moving into the United States over the past year: the recent pickup has predominantly reflected purchases of equity rather than debt. He suggested this shift could point to the possibility of a longer-term move away from the environment in which the United States could borrow with relative ease owing to the dollar’s role as the global reserve currency.
Hauser was careful to stress that any reconfiguration of the dollar’s international role is not guaranteed and that recent market behavior shows the currency continuing to function as a go-to asset in times of stress. His remarks underline a tension between observable flows and the potential for more fundamental changes in global finance, while emphasizing that, so far, the dollar’s safe-haven properties remain influential in markets.