Warren Buffett Warns on US Dollar

Warren Buffett Warns on US Dollar

Billionaire investor Warren Buffett raised eyebrows at Berkshire Hathaway’s annual shareholder meeting on May 3, 2025, suggesting it might be wise to hold currencies beyond the US dollar.

The 94-year-old, stepping down as CEO, cited concerns about America’s growing deficit and trade policies. His remarks come as the dollar faces scrutiny amid global economic shifts.

Buffett’s storied career

Warren Buffett, known as the “Oracle of Omaha,” is one of the world’s richest people, with a net worth of $169 billion, according to Bloomberg’s Billionaires Index.

Born in 1930 in Omaha, Nebraska, he showed an early knack for business, selling newspapers and candy door-to-door. He studied at the University of Nebraska and Columbia Business School, learning value investing from Benjamin Graham.

Buffett built Berkshire Hathaway into a conglomerate owning businesses like GEICO and holding stakes in Apple and Coca-Cola. His investment strategy focuses on long-term value, earning him global respect.

At the 2025 meeting, he passed the CEO role to Vice Chairman Greg Abel, marking a historic transition. Buffett’s influence makes his currency comments significant.

Why Buffett warned about the dollar?

Buffett’s remarks stem from worries about the US economy.

He pointed to the ballooning federal deficit, bureaucratic inefficiencies, and protectionist trade policies, like tariffs, as risks. “Obviously, we wouldn’t want to be owning anything that we thought was in a currency that was really going to hell,” he said, hinting at the dollar’s potential decline.

He suggested that major investments abroad, such as in Europe, might lead Berkshire to finance in foreign currencies.

Buffett’s concerns shows his 2003 move to allocate Berkshire’s cash into foreign currencies due to trade deficit fears. He believes these issues could weaken the dollar’s long-term value, prompting his call to diversify.

His caution reflects unease about US fiscal policy and global trade tensions, including tariffs under President Donald Trump’s administration.

Why the US dollar matters

The US dollar is the world’s dominant currency, used in nearly 88% of global transactions, per the Bank for International Settlements. It’s the primary reserve currency, held by central banks for stability.

A strong dollar keeps US inflation and interest rates low, boosts American purchasing power, and symbolizes economic might. Many commodities, like oil, are priced in dollars, making its value critical globally. A weaker dollar could make imports costlier for Americans and disrupt international trade. However, recent tariff announcements and economic uncertainty have led to a 9% drop in the dollar index in 2025, raising fears of further decline. Buffett’s warning highlights the dollar’s vulnerability amid these shifts.

Other billionaires on currency concerns

Buffett isn’t alone in questioning the dollar’s future. Ray Dalio, founder of Bridgewater Associates, has long warned about the dollar’s reserve status, citing US debt levels.

In 2024, he predicted that rising deficits could erode global confidence in the dollar. Stanley Druckenmiller, a hedge fund titan, echoed this in 2023, suggesting the dollar might lose its dominance within a decade due to fiscal mismanagement.

Both billionaires have advocated for diversifying assets, including gold and foreign currencies, to hedge against dollar risks.

Their views align with Buffett’s, reflecting a broader concern among financial elites about America’s economic trajectory.

Unlike Buffett, Dalio and Druckenmiller have also pointed to geopolitical tensions, like US-China rivalry, as factors weakening the dollar’s grip.

Global push for stronger currencies

Around the world, countries are working to bolster their currencies as alternatives to the dollar. China is pushing the yuan’s global use, with 2.8% of international payments now in yuan, up from 1.9% five years ago, per SWIFT data.

Beijing has signed currency swap agreements with nations like Brazil and Russia to reduce dollar reliance. The BRICS bloc—Brazil, Russia, India, China, and South Africa—is exploring a shared currency for trade, though progress is slow. India is promoting the rupee for oil trades with Gulf nations.

Meanwhile, the euro remains strong in Europe, backed by the European Central Bank’s stability measures. Switzerland’s franc is gaining as a safe-haven currency amid global uncertainty, with exports making up 75% of its GDP. These efforts signal a gradual shift away from dollar dominance, though the greenback’s role remains unmatched for now.

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