The US dollar is experiencing a sharp decline, raising concerns among economists and investors. This article explores the reasons and consequences of the current economic changes.
Reasons for Rising Money Supply
According to the Federal Reserve Bank of St. Louis, the M2 money supply reached $21.942 trillion by May 2025, exceeding its previous record. This rapid growth in the money supply is thought to have weakened the dollar, raising alarms regarding the implications of an oversupply of currency on its international standing.
Experts' Predictions for the Dollar
Experts like Meera Chandan of JPMorgan suggest that the dollar’s current weakness might persist through the year’s latter half. Financial improvements in Europe, coupled with the U.S. facing increasing debt and budget deficits, are likely to maintain pressure on the dollar.
> Chandan emphasized, "The outlook remains weak across all fronts... We foresee euro/dollar at 1.20-1.22, dollar/yuan at 7.10, and dollar/yen at 140."
Impact on International Relations
Economists predict the adverse impact of structural issues within the U.S. financial system on the dollar. With Europe implementing growth-supportive fiscal policies, these measures might further weaken the American currency. Increasing money supply and debts are key data backing this outlook.
Close monitoring of the dollar’s performance continues as 2025 unfolds. With persistent money supply increases and budget challenges, currency fluctuations are expected. Investors are advised to remain vigilant as these economic shifts could present both risks and opportunities on the global stage.
