In June, the US dollar fell by 10.7%, marking the steepest half-year decline since 1973. This dramatic weakening of the world’s primary reserve currency has sparked concern among global investors, especially on Wall Street.
Amid rising geopolitical uncertainty and economic volatility, investors are rapidly revising their portfolio strategies, seeking to diversify away from the dollar and reduce risk exposure.
The dollar's slump is driven by a convergence of macroeconomic and political factors. Key among them is the soaring US national debt, which is nearing $30 trillion, alongside a persistent federal budget deficit. Forecasts suggest the deficit could reach $2 trillion by 2025, undermining confidence in the dollar's long-standing dominance in international finance.
Adding to the pressure are expectations that the Federal Reserve may soon lower interest rates. A more dovish monetary policy stance could further fuel inflation and weaken the dollar amid sluggish economic growth.
Persistent trade tensions—particularly between the United States and China—are also injecting uncertainty into the market, hurting the competitiveness of American exports despite the weakening currency.
This global instability has prompted central banks to diversify their foreign reserves. According to the World Gold Council, gold purchases by government institutions reached record highs in the first half of 2025. This signals a growing preference for tangible assets as a hedge against currency fluctuations.
Historically, a strong dollar has symbolized the resilience of the American economy. However, current trends suggest a structural shift in the global financial system, with capital increasingly flowing toward alternative stores of value such as gold, commodities, and digital currencies.
