The US dollar continues to fall sharply in value against other major currencies, continuing the trend that saw its steepest annual drop in almost a decade in 2025.
The dollar fell by 1.3% against a basket of currencies on Tuesday, meaning that it has fallen by 2.6% since the start of 2026. It slumped by 9.5% in 2025.
The fall in the dollar has implications for the euro and other currencies. The single European currency has now hit the $1.2 level for the first time since 2021, while the British pound and Japanese yen have also reached recent highs against the US currency.
Several economists and analysts have attributed the dollar’s continuing decline to a lack of investor faith in the US currency amid continuing concern over unpredictable policymaking from US President Donald Trump.
There is also the view that Trump and many in his economic team want the dollar to lose value in the hope that it will boost US exports and manufacturing as part of a long-held strategy.
When asked this week if he was concerned by the dollar’s fall in value, he said: “No, I think it’s great.”
Stephen Miran, a former chairman of Trump’s Council of Economic Advisers and now a member of the Board of Governors of the US Federal Reserve, published a “User’s Guide to Restructuring the Global Trading System” in November 2024 with possible tools for correcting the trade deficit, mentioning specifically tariffs and devaluation of the dollar as the main instruments. (DW)