Amid the consequences of the financial market that followed the announcement of the “Liberation Day” rate of Donald Trump on April 2, the value of the US dollar has looted.
But although the United States stock markets have been largely recovered since then, backback, which generally wins in the duration of the value of financial turbulence, has continued its downward trajectory.
This is because the severe nature of Trump’s international commercial policies has increased the possibility of a recession of the United States at the end of this year, doubting the demand for the currency of the United States.
The Trump tariff is also forcing investors to face the possibility that the domain of the dollar may be fading, or simply get to an end.
“The world faces a crisis of confidence in dollars such as the repercussions of the ‘Day of Liberation’ continues to reverberate,” wrote Deutsche Bank analysts in a note recently to customers.
For about a century, the United States has been the world investment “safe”. Country boxes still maintain a green back plug, which means that their currency prices are correlated.
But investors are now beginning to worry about the long -term security of the dollar, and the consequences could be dramatic.
What happened to the dollar?
On April 2, the Trump Administration presented punishing tariffs in imports of diseases from countries around the world, denoting confidence in the world’s largest economy and causing a sale of financial assets in the United States.
More than $ 5 billion were deleted from the value of the S&P 500 shares index of reference in the three days after the “day of release”.
The United States Treasury Bonds, considered for a long time the safe archetypal investment, also saw liquidations, lowering their price and sending debt costs for the United States government.
Before a revolt in the financial markets, Trump announced a 90 -day break on rates, except China’s exports, April 9. But investors are still captivated for having assets linked to the dollar.
So far in April, the dollar has fallen by 3 percent in relation to a basket of other currencies to reach its lowest level in three years, which aggravates a drop of almost 10 percent since the beginning of 2025.
“Investors have legs for the sale of legs, and the value of the dollar has fallen,” said Karsten Junius, boss economist of Bank J Safra Sarasin to Al Jazeera.
“But the dollar has not increased so much [as US equity prices since April 9] Because there is a leg a loss or confidence in the formulation of economic policies of the United States, “he added.
Why is the US dollar so important?
During the last 80 years, the US dollar has maintained the state of the primary reserve currency: foreign currencies maintained in significant amounts by the monetary authorities of the world.
In large part, the dollar emerged as the dominant global currency due to World War II. As Europe and Japan descended to chaos, the United States was money.
Then, in 1971, when Richard Nixon withdrew the gold from the value of the US dollar, Greenback’s role grew in support to the global financial system. Then demand.
After the “Nixon clash”, most countries abandoned the convertibility of gold, but did not adopt exchange rates decerred to the market. Instead, they linked their coins to the dollar.
Due to its domain in trade and finance, the dollar became the standard currency anchor. In the 1980s, for example, in many Gulf countries, the fixation was its coins for the backback.
His influence did not stop there. Although the United States only represents a quarter of the global gross domestic product (GDP), 54 percent of world exports were called dollars in 2023, according to the Atlantic Council.
His domain in finance is equally older. About 60 percent of all bank deposits are called in dollars, while almost 70 percent of international bonds are quoted in the US currency.
Meanwhile, 57 percent of the world’s foreign exchange reserves, assets heroes by central banks around the world, are heroes in dollars, according to the IMF.
But the dollar reservation status is largely supported by the confidence in the economy of the United States, its financial markets and its legal system.
Trump is changing that. “International standards do not care,” said Junius, and “investors begin to realize that they are too exposed to US assets.”
In fact, foreigners have $ 19 billion of American shares, $ 7 billion of the United States treasure bonds and $ 5 billion of US corporate bonds, according to Apollo assets management. That is approximately 30 percent of global GDP.
If only some of the investors begin to cut their positions, the value of the dollar could be under sustained pressure.
What are the consequences of a dollar of lower value?
Many in the Trump team argue that the costs of the US dollar reserve state exceed the benefits of robbery, which increases the cost of US exports.
Stephen Miran, president of the Trump Economic Advisors Council, recently said that high assessments in dollars place “undue burns in our companies and workers, making their products and work not competitive on the global stage.”
“The theft of the dollar has been a factor that contributes to the loss of competitiveness of the United States over the years, and … rates are a reaction to this unpleasant reality,” he added.
At first glance, a lower dollar would make us cheaper for buyers abroad, supporting national manufacturing and helping to reduce commercial deficits in the country.
“It will also make imports more expectations, harming consumers,” former Colombian Finance Minister José Antonio Ocampo told Al Jazeera. “The general opinion is that the inflation of the United States will increase.
“Otherwise, the price of gold has also increased,” said Ocampo. “It seems that there is a growing preference between central banks to contain gold instead of the United States Treasury bonds.”
Ocampo said that he also thinks that confidence in the dollar has a success as a result of Trump’s tariff ads and that his sale of the sale has compensated for earnings for other safe hull currencies.
On April 11, the euro reached a maximum of three years above $ 1.14 and has earned more than 5 percent per dollar since the beginning of the months.
Could another currency take the place of the dollar as a world dominator?
“For now, I think the dollar will continue to be the dominant global currency,” said Ocampo.
But he also said that when weaving the economic foundations of the United States, Trump is undermining world domain in dollars. For his part, Ocampo mentioned two coins that will benefit.
“We have seen tickets in the Swiss Franco recently. But the euro is the true alternative to the dollar,” he said.
Currently, the euro constitutes 20 percent of international foreign exchange reserves, one third of the dollar amount.
“If the EU can agree with the closest fiscal union and, crucially, more integration into its financial markets, it will be the currency that could take the mantle,” Ocampo said.