(13 June 2025 – Global) The US dollar is depreciating rapidly as market participants sell-off the global reserve currency amid traders growing uncertainty about US economic policy.
The greenback has declined to its lowest in three years as unpredictable ever-changing US trade policy unsettles markets and expectations build for Federal Reserve rate cuts under threat by a rising oil price as middle east tensions mount between Israel and Iran, fuelling outflows from the world’s largest economy.
The USD is almost ten percent lower against a basket of major currencies this year, leaving other countries struggling with unanticipated FX moves that are having a knock-on impact on economic growth and inflation. Pound Sterling is up almost nine percent this year and analysts say foreign buyers may be rushing to snap up UK Plc before any further dollar weakness makes future transactions more expensive. European Central Bank (ECB) rate setters have a close eye on the single currency, which at $1.15 is near its highest since 2021.
“There’s clearly solid dollar selling. In my heart-of-hearts we are going to get the EURUSD to $1.20 but we shouldn’t get there too fast because it’s deflationary” said Societe Generale Chief FX Strategist, Kit Juckes.