US dollar expected to show worst half-year result since 1973 - FT
Kyiv • UNN
The US dollar is rapidly depreciating, heading for its worst half-year performance since 1973. This is due to President Donald Trump's trade and economic policies, which are forcing investors to reconsider their attitude towards the currency.
The US dollar is heading for its worst first-half performance since 1973, as the trade and economic policies of American leader Donald Trump are forcing global investors to reconsider their interest in the world's most influential currency. This is reported by the Financial Times, according to UNN.
Details
The dollar index, which measures its strength against a basket of six other currencies, including the pound sterling, euro, and yen, has fallen by more than 10% since the beginning of 2025. This is the worst start to the year since the end of the Bretton Woods gold-exchange system.
The dollar has become a "scapegoat" due to Trump 2.0's inconsistent policy
The trade war with constant pauses, huge US borrowing needs, and concerns about the Federal Reserve's independence have undermined the dollar's attractiveness as a reliable asset for investors, the expert added.
On Monday, the dollar fell 0.2% as the US Senate prepared to vote on amendments to Trump's sweeping tax bill.
This law is expected to increase the US national debt by $3.2 trillion over the next decade, which has heightened concerns about the sustainability of US borrowing and caused capital outflows from the US government bond market.
The sharp decline in the dollar is sending it towards its worst first half since a 15% loss in 1973 and its weakest performance for any six-month period since 2009.
The currency's depreciation disproved widespread forecasts at the beginning of the year that Trump's trade war would harm economies outside the US more, raising American inflation and strengthening the dollar against competitors.
Instead, the euro, which several street banks had predicted to parity with the dollar, rose 13% above $1.17, as investors focused on the risks to the growth of the world's largest economy, and demand for safe assets in other countries, such as German bonds, increased.
There has been a real shock to the US political system, especially after the announcement of mutual tariffs in April
He emphasized that the dollar's status as the world's reserve currency is not under threat, but it could significantly weaken. The change in investor sentiment leads to hedging of their dollar positions, which itself puts pressure on the exchange rate.
Additionally, expectations of more aggressive interest rate cuts by the Federal Reserve to support the US economy, particularly at Trump's insistence, are contributing to the dollar's decline. Moreover, at least five quarter-point rate cuts are expected by the end of next year, according to futures contracts.
Bets on rate cuts have helped the US stock market ignore fears over the trade war and the Middle East conflict, reaching record highs. However, a weaker dollar means that the S&P 500 trails European competitors if earnings are counted in the same currency.
Large investors – from pension funds to central bank currency reserve managers – have expressed a desire to reduce their reliance on the dollar and US assets, questioning whether the currency remains a reliable refuge from market fluctuations.