Billionaire venture capitalist Chamath Palihapitiya believes a long-term decline of the U.S. dollar is not an existential concern for America, despite the currency’s worst first-half performance in over 50 years.
What Happened: Speaking on the All-In podcast on Friday, Palihapitiya responded to host Jason Calacanis, highlighting that the U.S. Dollar Index (DXY) lost nearly 11% of its value against major currencies in the first six months of 2025.
While Calacanis described the slump as “shocking,” Palihapitiya argued the dollar has been in decline for decades without major consequences because gains from U.S. assets have consistently outweighed currency depreciation.
“This has been a one-way trade for a very long time,” Palihapitiya said. “The United States finances a lot of growth, and that has been the right decision. Unless you see a complete collapse in the currency, I suspect that this decay continues to happen.”
The key question, according to Palihapitiya, is whether dollar decline represents a fundamental problem. “The answer is it depends. Because if asset prices increase faster than the dollar devalues, you’re still ahead,” he explained.
Palihapitiya emphasized that U.S. assets remain the global “flight to quality” across equity markets, real estate, and hard assets. “The reality is that a lot of people still want to own these assets more than they want to own other assets and those assets are dollar-denominated.”
He noted that constant demand for dollar-denominated assets will persist as long as “there’s American ingenuity and American supremacy,” meaningfully offsetting USD holding risks.
Why It Matters: The dollar’s decline accelerated after Germany launched large-scale stimulus and the EU unveiled its €800 billion “ReArm Europe” plan in March. Trump’s “Liberation Day” tariffs in April and a 0.5% first-quarter economic contraction further pressured the currency.
Economist Peter Schiff warned that “the world is losing confidence in the dollar” after 10-year Treasury yields climbed to 4.5% in May. Warren Buffett expressed disappointment over dollar depreciation, saying investors wouldn’t want assets “in a currency that was really going to hell.”
However, analysts note the weaker dollar benefits U.S. multinationals with significant overseas revenue, as approximately 40-45% of S&P 500, tracked by SPDR S&P 500 (NYSE:SPY), revenues come from abroad.
Price Action: The U.S. Dollar Index is currently trading at 97.56, reflecting a year-to-date decline of 10.07%. Among related ETFs, the Invesco DB U.S. Dollar Index Bullish Fund (NYSE:UUP) is down 7.92% at $27.09, while the WisdomTree Bloomberg U.S. Dollar Bullish Fund (NYSE:USDU) is trading at $26.01, down 5.97% year-to-date.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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