We may have already experienced the last U.S. dollar tidal cycle.

What likely disgusts Americans most is that China’s role has extended beyond its national borders, effectively assuming a quasi-Federal Reserve function by providing additional liquidity. The People’s Bank of China has established bilateral local-currency swap arrangements with over 40 countries and regions, totaling several trillion RMB. While these swaps cannot fully replace the U.S. dollar nor grant unconditional access to free funds, they do provide an alternative channel for trade settlement and temporary liquidity. According to research jointly compiled by AidData, the World Bank, Harvard Kennedy School, and the Kiel Institute for the World Economy, between 2000 and 2021, China extended 128 rescue loans totaling approximately $240 billion to 22 developing countries facing balance-of-payments crises—many of these occurring after 2016. If we liken the traditional dollar-based system to an irrigation network controlled by a central sluice gate operated by the Federal Reserve, then China’s actions resemble building reservoirs and laying branch pipelines beside drought-prone plots—while continuing to supply relatively stable-priced industrial goods. When the U.S. tightens dollar liquidity, China cannot conjure dollars out of thin air, nor can it save every highly leveraged country—but through trade surpluses, local-currency swaps, debt rollovers, infrastructure investment, and commodity supply, it can delay the transmission of dollar shortages into full-blown production collapse. Let me repeat my favorite line once more: while the U.S. prepares to harvest韭菜 (‘leeks’) in peripheral markets, China keeps planting rebar in the leek fields. The fourth reason is that global industrial and commodity demand has not been completely shattered. As one of the world’s largest manufacturing nations, China refrained from imposing self-inflicted monetary tightening during the Fed’s rate-hiking cycle—and instead used fiscal policy, credit support, infrastructure spending, manufacturing investment, and export systems to sustain substantial real demand. Meanwhile, energy transition, power grid construction, AI infrastructure, industrial chain restructuring, and geopolitical security investments continue generating fresh demand for copper, aluminum, energy equipment, and industrial goods. A stronger dollar still suppresses commodity prices—but supply constraints and genuine investment demand have prevented resource-exporting countries from reliving the 1980s scenario, when both export revenues and financing capacity collapsed simultaneously. The outcome from 2022–2024 has been deeply awkward: the U.S. successfully attracted capital through aggressive rate hikes, causing the dollar to surge temporarily and imposing higher global funding costs—but core emerging-market countries did not default en masse; China’s foreign exchange reserves and manufacturing system remained intact; and resource and industrial assets avoided cross-regional fire-sale pricing. In other words, the U.S. bore the backlash of high interest rates—hurting its own banks, commercial real estate, corporate financing, and fiscal health—yet failed to reap commensurate external asset discounts, as seen in previous tidal cycles. The 2023 collapses of Silicon Valley Bank and other institutions directly exposed massive unrealized losses on U.S. Treasuries and mortgage-backed securities amid rapid interest-rate rises; U.S. commercial real estate remains under sustained pressure from remote work and rising financing costs; and the federal government’s newly issued bond yields have surged from near zero, forcing maturing debt to be refinanced at significantly higher costs. The Fed’s rate hikes were originally intended to drain dollars from the global system—but the ultimate result was that hard assets and cash flows remained unharvested, while mounting costs—debt burdens and inflation-driven debt write-offs—accumulated increasingly on America’s own balance sheet.

The U.S. Dollar Index has returned to 100 four months later—the first time since November last year. What information deserves attention?

• USD Index performance: According to the latest data from the New York Mercantile Exchange (NYMEX) on March 13, the front-month USD Index closed at 100.16, opening at 99.45 and reaching a high of 100.265. It rose by 0.656 on the day, with trading volume surging to 35,400 contracts—up sharply from the previous session’s 22,400 contracts—indicating markedly heightened buyer enthusiasm for the dollar. This breakthrough above the 100 threshold was no fluke but driven by tangible capital inflows. It marks the first time since November 2025 that the USD Index has firmly settled above 100—a development carrying strong market signaling significance. • U.S. economic data: On the evening of March 13, two key U.S. data releases both missed expectations. First, the Q4 2025 real GDP annualized quarter-on-quarter growth rate was sharply revised down from an initial 1.4% to just 0.7%, a steep decline from Q3’s 4.4% and underscoring mounting pressure on U.S. growth. Second, the Fed’s preferred inflation gauge—the core PCE price index—rose 3.1% year-on-year in January, the highest level since March 2024, signaling persistent inflationary pressures. Notably, despite signs of ‘stagflation’—slowing growth coupled with elevated inflation—the dollar strengthened against this backdrop. The primary driver was geopolitical risk-driven safe-haven demand, which decisively outweighed the dampening effect of weak economic data. II. Three Core Drivers Behind the USD Index’s Return to 100 1. Geopolitical dominance: Escalating Middle East conflict draws safe-haven capital into the dollar Currently, intensifying Middle East tensions constitute the single most dominant factor propelling dollar strength. As of March 14, U.S.-Israeli military strikes against Iran remain ongoing—with the most critical consequence being disrupted passage through the Strait of Hormuz. Dubbed the ‘world’s oil valve,’ the Strait handles roughly 20% of globally seaborne oil trade—some 20 million barrels per day—and over 90% of Persian Gulf oil exports must transit this narrow waterway. Disruption here has directly triggered global energy-supply panic and sharp oil-price volatility. Since late February, oil prices peaked near $120 per barrel—the highest since 2022—though subsequent statements by Trump lifting some oil sanctions and G7 plans to release strategic reserves briefly pulled prices back to the $80s. Overall, however, prices remain 30–40% higher than pre-conflict levels. Global risk aversion has thus surged, and the U.S. dollar—as the world’s traditional safe-haven currency—has become investors’ top refuge. Data show massive recent inflows into dollar-denominated assets (including U.S. Treasuries and cash), alongside widespread covering of prior short-dollar positions. This dual dynamic—buying and covering—has combined to push the USD Index up from 97.82 on March 2 to 100.16 on March 13: a 2.34-point gain over 10 days, successfully breaching the 100 threshold. 2. Divergent economic performance: Rising oil prices exacerbate weakness in non-U.S. currencies, highlighting dollar strength

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