USD currency risk (US debt ceiling default risk)

Hello, is anybody USD exposed and thinking that could be risky? If you don’t consider it risky, would you explain why? Instead If so, would you share eventual strategies (for cash and/or USD ETFs)?

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It’s very unlikely to matter beyond those couple of days of potential high volatility (which has a bit of risk of breaking some backend stuff unintentionally). So yes I’m ignoring it since I care about long term :slight_smile:


For fixed income and cash assets: I want my assets to be in the currency I intend to spend, so I personally wouldn’t keep them in USD (because I spend CHF and will for the forseeable future). If I were spending USD, I would keep the assets needed to cover my short term needs in something that I expect to stay liquid (short term treasuries may temporarily not be). I may want to hedge the assets designated for my long term needs out of pure treasuries if I were there and use globally diversified bonds (both government and investment grade corporate ones) or other assets like gold or CHF (which is a reserve currency).

For stocks, they represent part ownership of companies, so I wouldn’t stress over which currency they are denominated in: the value of the company is not dependent on it.

Both US and non-US companies may generate revenue and have expenses in USD, and/or be exposed to people whose buying capacity would be affected in case of a US debt crisis, so I would expect a temporary drop in value of my stocks (the few companies with no exposure to the USD at all could be contaminated by a global crisis), which could result in bankruptcy for some companies. I can’t evaluate which companies would be most affected, as I guess many of them just ran on the idea that US treasuries don’t have a credit risk and many may not have adjusted that view yet so I’m staying broadly diversified.

I can’t evaluate the impact a US debt crisis would have on the long run but I stay confident globally diversified stocks will at least maintain their value at a 30 years time horizon, so I don’t see a reason to change my long term strategy in that regard.

Other types of assets I may consider are gold, real estate in safe and politically stable places and trustworthy relationships (ideally also in different countries). I don’t have enough assets to protect to warrant doing that, so I don’t.