Hedge Funds Sold the Dollar After Supreme Court Tariff Ruling
Citigroup revealed that its hedge fund clients reduced their U.S. dollar exposure around Friday’s U.S. Supreme Court decision concerning President Donald Trump’s sweeping tariff policy.
According to a note from the U.S. bank shared with Reuters on Monday, hedge funds were net sellers of the dollar both during and after the court ruling.
The dollar experienced volatile trading on Friday after the Supreme Court struck down the tariffs, which had been introduced under a national emergency law. The ruling triggered sharp market reactions across major currency pairs.
Kristjan Kasikov, global head of Citi FX Quant Investor Solutions, stated in the note that Citi’s hedge fund clients were net sellers of the U.S. dollar following the decision. He also highlighted that the Australian dollar was the most purchased currency among major pairs during that period.
In addition, emerging market currencies — particularly in Asia and Latin America — attracted inflows as investors adjusted their positions.
Despite the market volatility, Citigroup noted that trading volumes were broadly consistent with historical patterns. The outcome of the Supreme Court decision had largely been anticipated by market participants, which limited extreme positioning shifts.
Even after Friday’s decline in the dollar, Citi’s internal currency positioning indicator continued to signal moderate long dollar exposure. These long positions were mainly driven by hedge funds and real-money investors.
A long position refers to an investment strategy where traders expect an asset’s price to increase over time.
