2 weeks Ago
NEW YORK, March 30 — As US stock markets tumbled this month, a surprising shift in investor behavior sent shockwaves through global finance — rather than flocking to the dollar for safety, traders abandoned it, fueling a sharp decline in the currency’s value.According to a Bloomberg report, the dollar, traditionally a safe haven during financial downturns, was declining even as investors sought stability elsewhere.“It’s unusual and very telling,” said John Sidawi, a fund manager at Federated Hermes who helps oversee bond investments.
“The dollar, in an environment where it should be acting like a safe haven, is not.”This unexpected drop is linked to President Donald Trump’s aggressive trade policies, which have disrupted global confidence in the US currency.Just two months into his second term, Trump’s push to dismantle globalisation through tariffs and isolationist policies has weakened the dollar’s standing.
Over the past three months, the dollar has dropped against nearly all major currencies, while gold prices surged past US$3,000 (RM13,300) an ounce as traders bet against the greenback.Michael Brown, a senior research strategist in London for Pepperstone, noted that investors are now actively questioning whether the dollar is still the best safe-haven asset.Trump’s economic policies, including higher tariffs on imported goods, have also fueled fears of inflation and slowed economic growth.
Despite these concerns, the dollar remains the world’s dominant reserve currency due to its deep liquidity and widespread use in global trade.However, some analysts argue that Trump’s policies are accelerating long-standing discussions about diversifying away from the US dollar.Meanwhile, US stock markets have continued to decline, with investors bracing for further tariff hikes that could destabilise trade relationships.
Economists warn that if these trends persist, the US dollar’s safe-haven status and global dominance could face unprecedented challenges..
