The dollar index (DXY) which measures the strength of greenback against six major currencies including euro, Swiss franc, Japanese yen and British pound is hovering near the 97 mark. In 2025, so far it has declined by 10.4%. From a 52-week peak of 110, the fall has been to the tune of 13%.
A Financial Times report said that the fall reflects the worst start to the year since the end of the gold-backed Bretton Woods system. The dollar’s sharp decline puts it on course for its worst first half of the year since a 15 per cent loss in 1973 and the weakest showing over any six months since 2009, the report said.
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This system was a global monetary framework established in July 1944 at a conference in Bretton Woods, New Hampshire, USA. It created a system of fixed exchange rates, with the US dollar at the centre.
Trump’s start-pause tariff war, differences with the Federal Reserve, and US’ rising debt is undermining the safe haven appeal of the dollar for investors, Francesco Pesole, an FX strategist at ING said, while noting that the dollar has become the “whipping boy of Trump 2.0’s erratic policies”.The currency was down 0.2% on Monday as the US Senate prepared to begin voting on amendments to Trump’s “big, beautiful” tax bill.The legislation, which is being described as a landmark by the Trump administration, is expected to add $3.2 trillion to the US debt pile over the coming decade, the FT report said. It has already fuelled concerns over the sustainability of Washington’s borrowings, sparking an exodus from the US Treasury market.
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How have other currencies performed?
Against the Wall Street banks’ prediction of fall, the euro has risen 13% to above $1.17 as investors have focused on growth risks in the world’s biggest economy — while demand has risen for safe assets elsewhere, such as German bonds. The euro was estimated to fall to parity with the dollar this year.
USD has appreciated about a 7–8% against JPY while the British pound has gained nearly 3% against the dollar.
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