New Delhi, April 14: The US dollar fell 0.7 per cent on Monday — marking its fifth day of decline in a row. It pushed the DXY index, which measures the dollar’s strength against a group of major currencies, to its lowest level in three years.
Since the start of April, when US President Donald Trump declared ‘Liberation Day’ while unveiling his aggressive tariff policies, the dollar index has fallen more than four per cent. This decline comes as investors begin to lose confidence in the strength of the US economy and pull out their money from American assets.
President Trump addressed these concerns last week, saying that the US dollar would always remain ‘the currency of choice.’ He added that if any country tried to move away from using the dollar, a single phone call would be enough to bring them back. Despite his confidence, market reactions have shown increasing nervousness.
Although experts believe that there is still no clear alternative to the dollar as a global reserve currency, the recent back-and-forth over tariffs has created uncertainty. Just last week, the US increased tariffs on Chinese goods to a total of 145 per cent.
In response, China raised its tariffs on American imports from 84 per cent to 125 per cent. “This trade battle has triggered a global selloff in markets,” experts noted. Even traditionally safe investments like US Treasuries have been hit.
The yield on 10-year US Treasury bonds is now heading for its biggest weekly jump since 2001, a sign that investors are demanding higher returns for the risk they perceive.
Meanwhile, the rupee recorded its biggest single-day gain in over two years on Friday last week, rising 0.75 per cent as a weakening dollar and falling crude oil prices boosted sentiment.
Indian currency closed at 86.05 against the dollar, a sharp improvement from Thursday’s close of 86.70. This recovery came as investors grew increasingly concerned about the US economy which led to a broader decline in the dollar’s strength.
IANS