Why did the dollar fell hard? What are the expectations of the American currency these days?

Although the currencies are ascending and landing naturally in the markets, the recent decline in the value of the American dollar was dramatic and exceptional, despite its bounces somewhat up yesterday, which prompted many analysts to ask: Why does the dollar decrease? And why is this matter important? According to a report of the British “BBC” network.

The rise of the dollar in the beginning

The dollar rose during the fall of 2024 before the US elections, driven by a relatively strong economic growth in the United States, and was strengthened after Donald Trump’s victory in the hope that his policies will contribute to the continuity of this trend.

Trump’s promises to impose customs definitions also contributed to pushing inflation expectations to rise, which strengthened hopes to raise American interest rates, and thus increased the dollar’s attractiveness to investors.
Also read: Including China .. Trump: Customs duties will be concluded with all countries

But the accounts have changed

With the passage of time, Trump’s commercial policies began to become clear, especially with the imposition of customs duties at stages and the presence of interruptions and extensions, especially in dealing with China, which increased the ambiguity on the repercussions of these procedures.

At the same time, the forecasts of slowdown in the United States began to be greatly strengthened.

Trump fees weaken the dollar

The dollar was negatively affected by the customs duties, along with the public attack by Trump on the head of the Federal Reserve, Jerome Powell, due to the failure to reduce interest rates, which contributed to increasing pressure on the American currency.

The dollar index, which measures its performance against a basket of major currencies, has decreased to its lowest level in three years.
Also read: The most poverty countries are threatened with paying the larger bill for Trump fees

It is unusual for markets

The dollar and the US government bonds are usually considered safe haven in times of crisis, but the last wave of sale in both prompted the markets to a state of amazement and confusion.

“The dollar decreased after Trump’s announcement of the customs duties – which he described as editing day – caused a great shock,” said Jin Fuli, the chief currency strategy at the Rabobank Bank.

Does the dollar lose its global position?

This sudden decrease raised speculation about a broader shift than the global dependence on the dollar towards other currencies, amid questions about the future of its dominance as a main backup currency in the world.

Impact on citizens and trade

The American citizen begins to note the weakness of the dollar when traveling abroad, as his purchasing power is less, while foreign tourists benefit from increasing their purchasing power within the United States.

But the global impact is much wider. The dollar is the first spare currency, and is used to pay off debts and international transactions, and dominates about half of the global trade bills.

Feeds and losses

Weak the dollar contributes to reducing US export prices, which may enhance the competitiveness of American products globally, but in return it leads to high prices of imported goods, which presses the local consumer.

Does the dollar restore its position?

Despite these fluctuations, Jin Foley believes that the dollar may regain some of its strength in the coming weeks, but it is unlikely that it will return to its previous levels in light of the ongoing political and economic changes.