The Staggering Giant - Trump's Policies and the Falling Dollar

It was a soaring flight that ended abruptly. Shortly after Donald Trump's election as president, the US dollar saw a sharp rise - driven by promises of economic renaissance, tax cuts, and infrastructure investments. The markets responded with euphoria, and the dollar climbed significantly in December and January. But from the moment of his inauguration on January 20, disillusionment set in. The exchange rate dropped slowly but steadily - and plummeted dramatically after the announcement of the first tariffs on April 2. Within a few months, the US Dollar Index lost over 11 percentage points - from a plus of six to a minus of over five percent.

This development is more than a mere fluctuation in currency markets. It reflects a declining confidence in the economic direction of the US under Trump. In a globalized world, those who preach protectionism do not attract capital - they repel it. Investors flee from currencies that lack a strategic compass or whose leaders play trade wars like dominoes. The problem: the dollar is not just any currency. It is a global reserve, a benchmark, a pillar of trust - or at least it used to be. For investors, the decline presents a dilemma. A weak dollar can boost exports, make US stocks more attractive, and increase the value of gold and commodities. But those who invest in the dollar are betting on stability - not on speculation. In such a phase, the bet only makes sense if one is convinced a correction is near.

And yet, the dollar has an almost mythical resilience. Still. The real question is therefore not whether the dollar will return - but how long the world will continue to grant it that role. Trump's term in office may have marked the beginning of a phase in which many countries seriously consider alternatives. Those investing in the dollar now are not only taking on exchange rate risk - but also betting on the survival of a global order that has begun to wobble. A falling dollar is not necessarily a bad investment - it can also present entry opportunities. But it is no longer a safe haven. And that, perhaps, is the true tragedy of this curve.

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