The US dollar has witnessed its worst 6 months since 1973, and prompted the economic policies of the president Donald Trump International investors to sell their green currencies, threatening the position of the American currency as a safe haven.
The dollar index, which measures the strength of the currency, against a basket of 6 other currencies, including the pound, euro and the yen, decreased by 10.8% in the first half of 2025.
A war led Customs tariffs The intermittent launched by President Trump, and his attacks that sparked concerns about the independence of the Federal Reserve, to undermine the attractiveness of the dollar as a safe haven, and economists are concerned about the “huge, beautiful” tax law offered by Trump, which is currently being discussed in American Congress.
This historical legislation is expected to add trillion dollars to the debts of the United States during the next decade, and it has raised concerns about the sustainability of Washington’s borrowing, which led to a mass migration from the US Treasury Market, according to a report published by Al -Jazeera in English.
Meanwhile, gold has recorded high levels of high levels this year, with anxious central banks continuing to decrease the value of their dollar assets.
What happened to the dollar?
On April 2, the Trump administration revealed customs duties on imports from most countries of the world, which weakened confidence in the largest economy in the world and caused an intense wave of sale to US financial assets.
The Standard & Poor’s standard 500 index lost more than 5 trillion dollars in the three days that followed the “Liberation Day”, as Trump described the day he announced the customs duties, as well as bonds. The American Treasury Filtering operations, which led to a decrease in their prices and the costs of US government debts sharply.
In the face of a revolution in the financial markets, Trump announced on April 9th a 90 -day comment for customs duties, with the exception of exports from China, and while trade tensions with China have diminished, the second largest economy in the world, since then, investors are still cautious about possessing the assets associated with dollars.
Last month, the Organization for Economic Cooperation and Development announced its reduction in the United States for this year from 2.2% in March to only 1.6%, even with slowing down Inflation.
The near future
Given the future performance expectations, Republican leaders seek to pass the Trump law “one major and beautiful bill” via Congress before the fourth of July, and the draft law extends the tax cuts approved by Trump in 2017, reduces spending on health care and social welfare, and increases borrowing.
While some legislators believe that the approval of the bill may take until August, the goal is to raise the borrowing limit on the debts of the country of $ 36.2 trillion, and the budget office in Congress, a non -party party, announced that the law would raise the ceiling of the federal debt by $ 3.3 trillion by 2034.
This leads to a significant increase in the proportion of government debt to gross domestic product From 124% currently, which raises concerns about the long -term sustainability of religion, and in the meantime, the annual deficit will increase, when government spending exceeds tax revenues, to 6.9% of GDP from about 6.4% in 2024.
So far, Trump’s attempts to reduce spending have not been upgraded through the Ministry of Government Efficiency, which he heads Elon Musk To the level of expectations, and although customs duties on imports have increased the government’s revenues, American consumers paid for them, in the form of high cost.
The bottom line is that Trump’s unexpected policies, which prompted Moody’s credit rating agency to deprive the US government of its highest credit rating in May, has slowed the prospects for growth in the United States this year and weakened demand for its currency.
The dollar also decreased against the backdrop of expectations for the Federal Reserve Reduction interest rates to support the US economy, with the encouragement of Trump, with two or 3 discounts by the end of this year, according to the levels indicated by futures.
“Less attractive” destination
Thanks to its domination of trade and financing, the dollar has become the main currency in the world. In the 1980s, for example, many Gulf countries began to link their currencies to dollars.
Its effect does not stop there, although it is US A quarter of Global GDP represents 54% of global exports to dollars in 2023, according to the Atlantic Council.
Its hegemony increases in the financial sector, about 60% of all banking deposits are based on dollars, while about 70% of international bonds in US currency are recorded.
At the same time, 57% of the foreign reserves of central banks are reserved in dollars, according to For the International Monetary Fund.
But Trump is changing this, and the chief economist at J, Sarara Sarasin Carsten Junius, says: “Investors began to realize that they are excessive to American assets.”
Foreigners have $ 19 trillion of US stocks, $ 7 trillion of US Treasury bonds, and $ 5 trillion of American companies bonds, according to Apollo Asset Management.
If investors continue to reduce their investments, the value of the dollar may continue to press.
“The United States has become a less attractive place to invest these days … American assets are no longer safe as they were in the past.”
What are the consequences of a decrease in the value of the dollar?
Many are in the Trump administration that the costs of placing the dollar as a reserve exceeds its benefits, as this raises the cost of American exports.
Stephen Miran, the head of the Economic Chamber of Economists, said that the high value of the dollar is “in unnecessary burdens on our companies and workers, which makes their products and workers unable to compete for the global scene.”
He added: “The exaggeration in the evaluation of the dollar was one of the factors that contributed to the United States lost its competitiveness over the years … andCustoms It is a reaction to this annoying reality. “
At first glance, a decline in the value of the dollar may lead to a decrease in the prices of American commodities for foreign buyers and increase the cost of imports, which helps reduce the country’s trade deficit. However, commercial effects are still volatile due to continuous customs threats.
As for developing countries, the dollar twice the cost of paying dollar debt in the local currency will reduce the burden on debt burdened countries such as Zambia and Ghana And Pakistan.
Elsewhere, the dollar is expected to enhance the prices of basic commodities, which increases export revenues for oil, minerals or agricultural commodities such as Indonesia. کجريمة Chile.
Was the performance of other currencies good?
Since the start of Trump’s second state, the decline in the value of the dollar has turned the prevailing expectations that its trade war will cause more harm to economies outside the United States, and will stimulate American inflation, which strengthens the American currency against its competitors.
Instead, the euro increased by 13% to exceed $ 1.17, with investors continued to focus on the risks of growth within the United States, at the same time, the demand for other safe assets such as Bonds German and French government.
As for American investors, the dollar has also encouraged stock investments abroad. The “Stoxx 600” index, which is a large -scale scale for European shares, increased by 15% since the beginning of 2025, and when it was transferred to the dollar, this increase is 23%.
Meanwhile, inflation decreased, contrary to expectations again, from 3% in January to 2.3% in May.
According to Junius, there is no major threat to the dollar’s position as an actual global backup currency any time, but “this does not mean that we cannot witness more weakness in the value of the dollar … in fact, we still expect this from now to the end of the year.”