Dollar’s Half-Century Low: Trade Wars and Debt Fears Batter Greenback

The US dollar is experiencing its most challenging first half-year in over 50 years, with a 10.8% depreciation against a basket of currencies. This dramatic downturn, marking its worst performance since 1973, is largely driven by fears surrounding Donald Trump’s trade policies and concerns over the spiraling US national debt. Analysts describe the situation as investors losing confidence in the greenback’s traditional role as a stable asset.
The pound has capitalized on the dollar’s vulnerability, soaring to a three-year high of $1.37. While the currency markets faced significant headwinds, US stock markets showed remarkable recovery. Following an initial “Liberation Day” tariff-induced tumble in early April, which marked the worst week for US stocks since 2020, a 90-day pause on tariffs triggered a historic rebound. This propelled the S&P 500 to a record high by the close of June, illustrating market participants’ “fear of missing out” on potential reversals in trade policy.