Core Insights - Reserve managers are more reactive in their dollar transactions, buying when the dollar weakens and selling when it strengthens, indicating a lesser role in driving the dollar compared to private investors [1][4] - The U.S. dollar has declined by 9% this year, raising concerns about its status as a safe-haven currency amid geopolitical tensions and trade confrontations [2] - There is a notable divergence between U.S. dollar reserves and the dollar index, with reserves increasing while the dollar index has fallen, suggesting private-sector activity is more influential [3][4] Group 1 - Central banks managing trillions in reserves are crucial for the dollar's status, but their actions may not be as impactful as those of private investors [1][2] - The dollar fell 6.6% in Q2, coinciding with significant tariff announcements, yet reserves increased by approximately $50 billion, indicating a disconnect [3] - Private-sector buying appears to drive the dollar's value, while reserve managers adjust their positions based on market conditions [4][5] Group 2 - Reserve managers may be balancing competitiveness and portfolio considerations, leading to a more cautious approach in their dollar transactions [4] - When the private sector sells USD, reserve managers are unlikely to increase their holdings significantly, which could prevent further declines in the dollar [4] - The influence of private-sector directional flows on the dollar may have grown, overshadowing the actions of reserve managers [5]