An unusual trend is emerging in the financial markets: the US dollar is weakening, even during periods when investors typically seek its safety. President Donald Trump’s policies, characterized by increasing tariffs and a reversal of globalization, are cited as the cause for this erosion of confidence in the currency. Over the past three months, the dollar has depreciated against most major currencies, with the Bloomberg dollar index falling by nearly 3%.
This decline challenges the dollar’s traditional role as a reliable safe-haven asset in the foreign exchange market. While the dollar’s overall strength isn’t yet critically compromised, Trump’s actions have fueled discussions about the potential for countries to reduce their reliance on it.
President Trump has publicly stated his intention to maintain the dollar’s central role. However, his administration’s policies have led to speculation that he might be intentionally weakening the dollar through trade wars to gain a competitive advantage in trade.
Analysts are suggesting that Trump’s trade policies and the resulting strain on international relations could accelerate a move away from the dollar. George Saravelos of Deutsche Bank AG has cautioned about the possibility of the dollar losing its status as a safe-haven currency.
The uncertainty generated by these policies has also impacted US stocks, with the S&P 500 Index experiencing declines amid tariff concerns.