Worrying signs for Donald Trump! Is US Dollar is losing its mojo? Unprecedented sell-off, sharp decline hint so

Currencies rise and fall all the time because of inflation fears, central bank moves and other factors. But economists worry that the recent drop in the dollar is so dramatic that it reflects something more ominous as President Donald Trump tries to reshape global trade: a loss of confidence in the U.S, as per a report.

Among the threats tariffs pose to the U.S. economy, none may be as strange as the sell-off in the dollar, AP reported.

The dollar's dominance in cross-border trade and as a safe haven has been nurtured by administrations of both parties for decades because it helps keep U.S. borrowing costs down and allows Washington to project power abroad — enormous advantages that could possibly disappear if faith in the U.S. was damaged.


“Global trust and reliance on the dollar was built up over a half century or more," says University of California, Berkeley, economist Barry Eichengreen. "But it can be lost in the blink of an eye,” Eichengreen said.

Since mid-January, the dollar has fallen 9 per cent against a basket of currencies, a rare and steep decline, to its lowest level in three years.

Many investors spooked by Trump don't think the dollar will be pushed quickly from its position as the world's reserve currency, instead expecting more of a slow decline. But even that is scary enough, given the benefits that would be lost.

With much of world's goods exchanged in dollars, demand for the currency has stayed strong even as the U.S. has doubled federal debt in a dozen years and does other things that would normally send investors fleeing. That has allowed the U.S. government, consumers and businesses to borrow at unnaturally low rates, which has helped speed economic growth and lift standards of living.

Dollar dominance also allows the U.S. to push around other countries like Venezuela, Iran and Russia by locking them out of a currency they need to buy and sell with others.

Now that “exorbitant privilege," as economists call it, is suddenly at risk.

FAQs

Q1. Who is USA President?
A1. USA President is Donald Trump.

Q2. What is current dollar price?
A2. Since mid-January, the dollar has fallen 9 per cent against a basket of currencies, a rare and steep decline, to its lowest level in three years.