Why is the US dollar falling in 2025?

The United States dollar has experienced its worst first six months of the year since 1973 due to President Donald Trump's economic policies. Global investors have been selling off their dollar holdings, impacting the currency's 'safe-haven' status. The dollar index, which measures its strength against other currencies, fell by 10.8 percent in the first half of 2025.

President Trump's tariff actions and attacks on the Federal Reserve have raised concerns about the dollar's appeal as a safe investment. The proposed tax bill is expected to increase the US debt significantly, leading to worries about borrowing sustainability and prompting a shift away from US Treasury bonds.

Gold prices have surged as central banks buy more to protect against dollar devaluation. The dollar's decline can be traced back to the imposition of tariffs by the Trump administration, causing market uncertainty and a sell-off of US assets.

The Organisation for Economic Co-operation and Development (OECD) has lowered the US growth outlook, and concerns about the sustainability of Washington's borrowing have further weakened the dollar. Trump's policies have led to a downgrade in the US credit rating and expectations of Federal Reserve interest rate cuts.

Despite the dollar's historical dominance in global trade and finance, Trump's policies are eroding confidence in US assets. Foreign investors are reducing their exposure to US assets, potentially leading to continued pressure on the dollar's value.

A weaker dollar could benefit US exports but may also impact trade deficits and global debt repayments. The euro has strengthened against the dollar, while other currencies like the euro and safe assets have seen increased demand.

Overall, the dollar's decline is a result of Trump's policies and market uncertainties, with potential implications for global trade and finance.

According to the source: Al Jazeera.