📰 Dollar Slides Amid Mounting Concerns Over U.S. Economic Stability
September 20, 2025
The U.S. dollar is facing one of its steepest declines in decades, rattled by a confluence of economic, political, and fiscal uncertainties that have shaken investor confidence globally.
📉 Dollar Index Plunges
The dollar index, which tracks the greenback against a basket of major currencies, has dropped nearly 11% in the first half of 2025 — its sharpest fall since the floating exchange rate system began in 1973. Analysts warn that the slide may continue, with Morgan Stanley projecting another 10% decline by the end of 2026.
🏦 Fed Under Pressure
The Federal Reserve’s recent rate cut of 25 basis points, coupled with signals of further easing, has added to the dollar’s woes. Chair Jerome Powell emphasized a cautious approach amid a softening labor market, but political interference has raised doubts about the Fed’s independence — a cornerstone of dollar stability.
💰 Debt and Deficits Weigh Heavy
America’s debt-to-GDP ratio is nearing 130%, prompting massive Treasury issuance and volatility in bond markets. Foreign investors are increasingly wary of holding dollar-denominated assets, further weakening the currency’s appeal.
🌍 Global Shift Away from the Dollar
De-dollarisation efforts by BRICS nations and a surge in commodity settlements in non-dollar currencies are accelerating the shift. Central banks are ramping up gold purchases, and emerging markets are rallying as the dollar loses its safe-haven status.
🇮🇳 Impact on India
The Indian rupee has shown mixed reactions. On September 18, it depreciated by 16 paise to 88.01 against the dollar, following a brief appreciation the previous day. Traders are closely watching U.S.-India trade talks and tariff negotiations for further cues.
📊 Market Outlook
While the dollar may find short-term support from jobless claims data and cautious Fed messaging, the broader trend remains bearish. Investors are advised to monitor upcoming U.S. inflation and trade data, as well as geopolitical developments that could further sway currency markets.
Stock rally is masking deep anxiety from investors about the path forward for the world’s biggest economy
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