Dollar witnesses worst year since 1973
(MENAFN) The US dollar has dropped more than 10% against major global currencies in the first half of 2025, marking its steepest early-year decline since 1973, The New York Times reported on Monday, citing market data. Analysts link the slump to President Donald Trump’s aggressive trade agenda and mounting concerns over rising federal deficits.
The ICE US Dollar Index—which tracks the greenback against a basket of major currencies—has fallen 10.8% since January. This dramatic downturn contrasts with the dollar’s traditional status as a safe-haven currency, the outlet noted.
The last comparable decline came in 1973, shortly after the US abandoned the gold standard. Today’s fall, however, is being attributed to Trump’s push for economic nationalism, which includes sweeping tariffs and a shift toward a more inward-looking foreign policy.
Since taking office in January, Trump has enacted a broad tariff plan to shield US manufacturers. Dubbed “Liberation Day,” the initiative introduced a 10% tariff on all imports and significantly higher rates on goods from China, Canada, Mexico, and the European Union. While some of these tariffs have been temporarily paused for negotiation, markets remain unsettled.
Trump has defended the strategy as essential to reducing America’s trade deficit and bringing jobs back home. However, critics warn that the tariffs, combined with inflation concerns and ballooning government debt, have undermined investor confidence and weakened the dollar.
“What matters isn’t just whether the dollar is strong or weak,” said Steve Englander, global head of G10 FX research at Standard Chartered. “It’s what that tells us about how global markets perceive US policy.”
Some analysts caution that the dollar’s decline could have broader consequences, including raising doubts about its role as the world’s dominant reserve currency.
Adding to investor worries, the Senate recently passed a Republican-supported tax-and-spending package projected to inflate the federal deficit by $3.3 trillion, intensifying concerns over long-term fiscal stability.
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