For
decades, the US dollar has been the foundation of the global financial system.
Over half of global reserves, most international trade, and loans are tied to
the USD. But in 2025, we are seeing worrying signs: a falling exchange rate,
declining investor confidence, and attempts by countries to move away from
dollar dependence.
It
is too early to talk about the complete end of the dollar era, but one thing is
clear: the world is entering a period of currency restructuring. What is behind
the dollar’s weakening, and what are the consequences for the global economy?
“Love is when orders are more important than words.”
In
2025, the dollar index (DXY), which tracks its value against a basket of
leading currencies, fell by 10% — the largest annual decline since 2003. The
reasons are complex: a slowdown in the US economy, expectations of a Fed
interest rate cut, and political instability exacerbated by Donald Trump’s
rhetoric and constantly changing trade tariffs on virtually all countries.
The
dollar has shown weakness against the euro, franc, and yen. For example, the
euro has strengthened to 1.17, and the Swiss franc to levels not seen since
2021. Investors have increasingly fled to safe-haven assets, primarily gold.
Investors
fear a weakening of the Fed’s independence: Trump’s statements about
“reappointing” the Fed chairman and pressure to lower rates when the situation
does not warrant it are causing mistrust.
Dollar decline chart
The
dollar’s decline in the global economy no longer appears temporary. More and
more countries and investors are seeking to reduce their dependence on the US
currency, a process known as de-dollarization.
According
to recent surveys, in 2025, about 70% of market participants said they no
longer want to invest in the dollar due to growing geopolitical risks
associated with US policy. For comparison, in 2024, only 31% thought so. This
indicates a sharp deterioration in confidence in the dollar within a year.
Investors
are switching to alternative assets instead of the dollar. For example, 32%
plan to increase their investments in gold in the next 12–24 months—the highest
figure in the last five years. Gold is once again perceived as a reliable
safe-haven asset in times of uncertainty.
In
addition, about 16% of respondents intend to increase the euro share in their
portfolios, which is more than double the 2024 figure, when only 7% did so.
This reflects the strengthening of the euro as a serious alternative to the
dollar, especially against the backdrop of improving economic conditions in the
European Union and the stabilization of European Central Bank policy.
Central
banks are also actively reducing the dollar’s share of their foreign exchange
reserves. The dollar’s share of international reserves has fallen to 59%, the
lowest level in several decades. At the same time, the importance of other
currencies and gold is growing.
In
addition to financial indicators, de-dollarization is also evident in
intergovernmental relations. The BRICS countries and several other economies
are concluding bilateral trade agreements with settlements in national
currencies, bypassing the dollar. This not only reduces transaction costs but
also serves to reduce the impact of US sanctions.
President
Donald Trump’s policies also significantly impact the perception of the dollar
in global markets and US domestic economic policy. In particular, his frequent
criticism of the Federal Reserve System (Fed) and its chairman, Jerome Powell,
has raised concerns about the central bank’s independence.
Trump
has repeatedly called on the Fed to lower interest rates to support economic
growth and has threatened to appoint new leaders if his demands are unmet. Such
statements have increased volatility in currency markets and reduced investor
confidence.
In
addition, Trump’s tariff and foreign trade policies — especially the trade wars
with China — created additional risks and uncertainty for the US economy. The
increase in tariffs led to higher company costs and raised inflation
expectations, affecting monetary policy and the dollar exchange rate.
As a
result, Trump’s policies have a mixed impact: on the one hand, they stimulate
economic growth in the long term, but on the other hand, they have increased
instability and uncertainty, which has affected the dollar’s exchange rate and
status.
Thanks
to its liquidity and role in the global financial system, the US dollar is
likely to retain its status as the world’s main reserve currency in the coming
years. However, its share of global reserves is gradually declining.
The
world is moving towards a more multipolar currency system, where the euro,
Chinese yuan, and central bank digital currencies (CBDCs) will be used
alongside the dollar. These alternatives are gaining momentum and gradually
taking away some of the USD’s influence.
Possible
scenarios include a steady decline in the dollar’s share, the emergence of
several key reserve currencies, or a dramatic decline in confidence in the
dollar due to internal political and economic risks in the US.
For
the US, this means a potential increase in borrowing costs and the need to
adapt its economic policy.
