Dutch, Danish pension funds could cut another $217 billion in dollar holdings, BNP Paribas says

LONDON, June 12 (Reuters) - Pension funds in the Netherlands and Denmark could cut another $217 billion from their dollar holdings, as part of a broader trend of asset managers reducing their exposure to U.S. markets, according to BNP Paribas.

Strategists at the bank said in a note on Thursday that, based on data from the Danish central bank and Dutch pension funds, pension managers in the two countries cut their dollar exposure by the most in two months on record between February and April, to $59 billion from $97 billion.

WHY IT’S IMPORTANT

An increase in investors selling dollars will heap more pressure on the currency, which in turn undermines export-driven economies and complicates policymaking for central banks that must manage strong currencies as growth slows.

KEY QUOTES

"Factoring in the latest Dutch and Danish data, total unhedged dollar exposure as a percentage of total assets has fallen to 20% in April from a high of 23% in Q4 2024.

"Assuming holdings return to 2015 levels of 15% of assets under management, Dutch and Danish pension funds have room to sell around a further $217 billion of dollars, in our view."

CONTEXT

Investor concern about the reliability of the United States as a trading and diplomatic partner, as well as the resilience of government finances has resulted in a push away from U.S. markets.

BY THE NUMBERS

Dutch pension funds make up 40% of the euro zone private pension industry, while the Danish system represents around 20%.

The dollar has dropped by around 10% against a basket of major currencies =USD since the start of 2025, its weakest performance at this point in the year since 1973.