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The US dollar is on track for its worst year in modern history

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124 points harambae | 3 comments | 04 Jul 25 06:47 UTC | HN request time: 0.715s | source
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forgotoldacc ◴[04 Jul 25 07:45 UTC] No.44462155[source]▶
Looking at the scale of a few years, the dollar has been insanely overvalued post-COVID.

Historically, the euro has generally been a good bit more valuable than the dollar. But in 2022, the dollar was more valuable than the euro at a point. Recently it's been bouncing around at nearly 1 euro=1 dollar.

Then there's the yen. Used to bounce around between 1 dollar = 100~110 yen. Recently reached 1 dollar = 162 yen.

The dollar losing its value is a return to the pre-covid norm. Lots of countries pumped money into the US to make money off skyrocketing stocks and high interest rates, and now they're pulling it back into their countries. It's a high that can't last forever. And if it did last forever, that would not be good for the world as a whole since it would mean every country is supporting the US at the cost of devaluing themselves.

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koliber ◴[04 Jul 25 12:47 UTC] No.44464035[source]▶
Donald Trump has stated that he wants to weaken the dollar. It seems that he is succeeding.

My guess is that he wants to make it more attractive when it comes time to refinance the large portion of American long-term debt. He also wants to keep the interest rates low for the same reason.

My questions is: What is causing the actual slide? The concrete mechanics and motivations that are causing people to sell USD.

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1. ethbr1 ◴[04 Jul 25 14:54 UTC] No.44465095[source]▶
Devaluing the dollar is 100% the goal. It's literally noted as a key component in what the people running US trade policy now said they wanted to do, before joining government.

It has the side effect of boosting nominal investment value (even if real value stays flat or decreases), maintaining political support from people who can't do math. The numbers continue to look good, but outcomes worsen.

There are two flies in this ointment: international capital response and inflation.

The latter is why Trump has been spending political capital on demonizing the Fed and Powell. The house of cards collapses if actual inflation bites and reveals the game.

As to the former, it's tough to look at the situation and see US debt / equities as attractive as they once were:

1. Unsustainable US budget deficits

2. Political threats against the US central bank

3. Tariffs

4. Decreased immigration and worsening demographics

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2. pandaman ◴[04 Jul 25 15:47 UTC] No.44465537[source]▶
These do not explain how DXY[1] had been rallying up and started falling at the end of September 2022. At that time, if you don't recall, Trump was facing prison time and the US government was in the reliable hands of the most popular president ever with his cabinet of brilliant minds.

1. https://www.tradingview.com/symbols/TVC-DXY/?timeframe=60M

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3. ethbr1 ◴[04 Jul 25 18:03 UTC] No.44466622[source]▶
Or, take a look at measures objectively instead of predeciding whose side you want to be on.

https://finance.yahoo.com/chart/AAAU