The US dollar has fallen to its lowest level in three years, losing 9% against a basket of currencies since mid-January. This sharp decline raises concerns that investors are losing trust in the US and its economic policies.
Economists warn that the recent drop in the dollar reflects deeper investment concerns as President Donald Trump implements new trade policies. The dollar’s dominance in cross-border trade and as a safe haven has been a cornerstone of the US economy for decades, but this advantage is now at risk.
The sell-off in the dollar has accompanied turmoil in the US stock and bond markets, with investors selling off shares and Treasuries amid concerns about the impact of Mr. Trump’s tariffs on corporate growth and investment. The S&P 500 remains 14% lower than its most recent peak in February, placing it in correction territory.
Experts say that the dollar’s decline may be due to overvaluation rather than any underlying changes in the US economy. However, even a correction in the dollar is concerning given the benefits that would be lost if the US loses its status as the world’s reserve currency.
The dollar’s power has allowed the US government, consumers, and businesses to borrow at low rates, which has helped speed economic growth and lift standards of living. But now, this advantage is under threat as investors lose confidence in the US.
A weaker dollar could hit US consumers with higher rates for mortgages and car financing deals, while a loss of safe-haven status could also lead to higher interest rates on the ballooning US federal debt. China has been striking yuan-only trading deals with several countries, replacing the dollar as the emergency funder of last resort.
The implications of this decline are far-reaching, with experts warning that the US risks losing its position as a global economic leader unless it addresses these concerns. As President Trump continues to test the limits of his policies, investors remain vigilant, watching for any signs of further instability in the US economy.
Source: https://www.cbsnews.com/news/us-dollar-value-decline-trump-sell-off-tariffs