Brian Richard S660_ Sanchez

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What is Triffin dilemma and its forex implications?

The Triffin dilemma argues that a reserve currency must supply global liquidity by running deficits, but too many deficits erode confidence in that currency. The U.S. dollar exemplifies this paradox: global demand for USD forces America to export dollars via trade deficits, yet persistent deficits threaten long-term stability. Forex implication: periodic doubts about USD dominance arise, fueling calls for alternatives. For traders, Triffin explains cycles of USD strength and skepticism. Retail traders can interpret global reserve shifts and U.S. fiscal trends as long-term forex drivers. The Triffin dilemma shows the tension between global demand and national sustainability.