The US dollar is on track for its worst year in modern history

原始链接: https://www.semafor.com/article/07/03/2025/the-us-dollar-is-on-track-for-its-worst-year-in-modern-history

The US dollar is experiencing a significant decline, down over 7% this year, with predictions of a further 10% drop. This devaluation could boost US exports by making them more competitive but will also increase the cost of imports, exacerbating the impact of tariffs. While currently there are no clear alternatives, the dollar's central role in the global financial system is being questioned. Attempts to diminish the dollar's dominance through gold accumulation and currency swaps haven't yet succeeded. However, experts suggest the dollar's strength has historically relied on sound US policy and global engagement. The last time the dollar experienced a similar decline, the US abandoned the gold standard. This highlights the potential for instability triggered by significant dollar fluctuations.

A Hacker News discussion revolves around a Semafor article claiming the US dollar is on track for its worst year in modern history. Commenters attribute the dollar's decline to a return to pre-COVID norms, with money flowing back to countries that initially invested in the US. Some believe the reason for the pullback is more significant, alluding to unspoken factors and policy decisions under the Trump administration, like tariffs and increased deficits, contributing to economic instability and a desire to devalue the dollar to boost exports. While some acknowledge the potential benefits of a weaker dollar for US exports and manufacturing, others fear rising import costs and inflation, especially for food. There is also a debate on whether the Fed will be able to cut interest rates with the inflation from tariffs and devaluation. International investors are also looking for returns in Europe and Japan, even accounting for currency fluctuation and weakness. Some see Trump's policies as intentionally destabilizing.

The US dollar is on track for its worst year in modern history and may not be done falling yet. The greenback is down more than 7% this year and Morgan Stanley predicts it could fall another 10%. A weaker dollar could make US exports more competitive, boosting Trump’s plan to rebalance US trade, but makes imports more expensive, adding to the sting of tariffs.

A chart showing the value of the dollar versus other global currencies in 2025.

The question ahead is whether the dollar doesn’t just lose its value, but its role at the center of the global financial system. So far, there are few alternatives. And efforts to de-dollarize — central banks shifting into gold, China shoveling its currency into developing nations through swap lines — haven’t meaningfully shifted the picture. But as political economist Ngaire Woods wrote for Semafor in an essay earlier this year, “they haven’t dethroned the dollar, but that’s because the US government has protected it through sound policy and global engagement.”

Food for thought: The year that came closest to 2025 in dollar depreciation was 1973, and the result was then-President Richard Nixon taking the US off the gold standard. “Big moves in the dollar tend to create moments of instability,” Morgan Stanley’s Wilson said.