Unprecedented Drop in U.S. Dollar Value

The U.S. dollar has seen its most significant decline in 51 years, dropping by 10.8 percent in the first half of the year. This dramatic fall is largely due to President Donald Trump's unpredictable tariff and security policies, marking the steepest drop since the U.S. adopted a floating exchange-rate regime in 1973.

Factors Behind the Decline

Several negative factors have contributed to the dollar's sharp decline, including ongoing uncertainty over tariff policy, a downgrade of the U.S. credit rating, and fears of increasing fiscal deficits due to large-scale tax cuts. Additionally, global security issues, such as the unresolved war in Ukraine and escalating tensions in the Middle East, have weakened the dollar's status as a safe-haven asset.

Political Pressure on the Federal Reserve

President Trump has publicly criticized the Federal Reserve, urging significant rate cuts. Treasury Secretary Scott Bessent has echoed these sentiments, suggesting the central bank is too slow to act. With policy uncertainty persisting, Bloomberg predicts the dollar's weakness will continue into the second half of the year.