The US dollar has experienced its steepest six-month decline since 1973, falling by over 10% against the currencies of the country’s major trading partners.
This sharp drop comes despite a strong start to the year and has been fueled by growing investor concerns over inflation, rising national debt, and the global perception of US economic stability under President Donald Trump’s administration.
Unlike the 1973 fall, which followed the US exit from the gold standard, this decline stems from Trump’s aggressive tariff policies, isolationist foreign stance, and perceived unpredictability in economic governance.
The administration’s tough rhetoric on trade, surprise tariff announcements, and strained relations with the Federal Reserve have contributed to market volatility and weakened global confidence in the dollar.
A weaker dollar has made US exports more competitive but has raised the cost of imports and foreign travel for Americans.
It has also discouraged foreign investment at a time when the US government is looking to borrow more, raising concerns about the sustainability of the country’s rising fiscal deficit.
Compounding the issue is the growing trend of “de-dollarization,” with several countries increasingly seeking alternatives to the US dollar for international trade following sanctions on Russia.
Though full de-dollarization remains distant, the shift is symbolic of a broader move away from dollar dominance.
Investment analysts note that while US stock markets remain strong, the falling dollar has reduced actual returns for international investors.
Many are now turning to European and other markets where returns are relatively higher when converted from local currencies.
Despite hopes that Trump’s pro-business promises would strengthen the economy and boost the dollar, persistent inflation fears, interest rate hikes, and doubts over US policy have pushed investors to reassess.
With the US now facing both declining investor confidence and rising borrowing needs, questions are mounting about the dollar’s status as a global safe haven.
