The US dollar has recorded its worst performance in the first half of the year since 1973, losing over 10% of its value. Political and economic decisions by President Donald Trump have been cited as the primary drivers behind this decline.
Dollar's Drop and Its Causes
According to the Financial Times, investors worldwide have begun dumping the dollar, questioning its status as a safe haven amidst an unstable economy. The ICE dollar index, which tracks the currency against six major currencies, has seen a significant decline.
Trade Tariffs and Debt
Trump's tax reform plan, which could contribute an additional $3.2 trillion to the national debt, has raised concerns about Washington's ability to fund its commitments. According to ING foreign exchange strategist Francesco Pesole, 'the dollar has become the whipping boy of Trump’s erratic policies.'
Dollar Pressure and Alternatives
Expectations of aggressive rate cuts are also dragging the dollar down. Investors globally are increasingly hedging their dollar positions, further exacerbating the situation. Meanwhile, gold is hitting records as investors seek to preserve their asset value.
The US dollar is currently at its weakest level against rival currencies in over three years. While some anticipate a slowdown in its decline, significant shifts in financial policy could continue to negatively affect the dollar's position.
