The recent weakness of the U.S. dollar (USD) has sparked debate among investors and economists. Amid growing concerns about the current administration’s trade policies, rising inflation, and escalating geopolitical tensions, many are questioning whether America’s currency is heading toward a significant devaluation. In this article, we explore these dynamics, which are crucial for anyone with a stake in the U.S. market.
The U.S. dollar’s dominance
The USD has a long history of dominance in the global market. This prominence stems from America’s status as the world’s largest economy, accounting for approximately 26% of global GDP. The United States has consistently honoured its debt obligations and has never experienced hyperinflation. Its deep and liquid financial markets make it easy for global investors to buy and sell dollar-denominated assets. This reliability, underpinned by a strong rule of law and the independence of the Federal Reserve, has earned the dollar decades of international…
