Investor Dollar Exposure Hits 19-Year Low, BofA Survey Shows

Investor Dollar Exposure Falls to 19-Year Low as Sentiment Shifts, BofA Survey Finds

Investor positioning in the U.S. dollar has reached its weakest point in nearly two decades, according to Bank of America’s May Global Fund Manager Survey, highlighting a growing shift in sentiment away from the greenback.

The survey revealed that investor exposure to the dollar fell to its lowest level since 2005, marking a 19-year low. Notably, a record 17% of fund managers are now short the dollar, the highest figure recorded since May 2006. This trend suggests that a significant portion of investors are actively betting on further weakness in the U.S. currency.

Additionally, 40% of fund managers said they plan to increase protection against dollar depreciation, signaling rising concern about the currency’s outlook amid uncertainty around U.S. interest rate policy, global inflation trends, and slowing economic momentum.

At the same time, the share of investors who see the dollar as overvalued fell to 57%, down 12 percentage points from April. This represents the biggest month-on-month drop in that sentiment since September 2023, indicating that while many still believe the dollar is expensive, fewer investors are confident in that view.

The shift in positioning comes as expectations around the Federal Reserve’s monetary policy continue to evolve. With inflation showing signs of persistence but growth slowing, investors appear to be reassessing the dollar’s role as a safe haven and are positioning more defensively.

Overall, the data paints a picture of increasing caution in global currency markets, with fund managers moving away from the dollar and preparing for potential volatility in the months ahead.