The dollar fell by around 10% this year, as on 22 July, mainly due to uncertainty over President Trump’s trade policies and concerns over US debt and fiscal deficit. Issues like the political pressure on the Fed to cut rates aggressively have also weighed on sentiment.
“US exceptionalism is being challenged by markets due to uncertainty over the country’s policies and rising fiscal deficit and debt. This, along with concerns regarding growth, may shift the views on the dollar, but this is a long-term phenomenon.”
- The dollar declined so far this year due to expectations of rate cuts by the Fed and concerns over deteriorating government finances.
- The US-Japan trade deal led to some stabilisation in the dollar and prompted a recovery in Japanese equities.
- The dollar weakness could continue amid the country’s high financing needs, but this may not be a linear trend.
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