The value of the U.S. dollar has fallen sharply, marking the largest drop since 2022. Analysis suggests that the aggressive trade policies of U.S. President Donald Trump are leading to the dollar's weakness.
On the 10th (local time), according to CNBC, the dollar index (DXY), which reflects the value of the dollar against six major currencies including the euro, recorded a decline of 1.83% from the previous trading day, settling at 101.02. At one point during the trading day, it dropped below 101, setting a record low since September of last year.
Initially, the market expected that President Trump's high tariff policies would reflect a strong stance of the U.S. economy and lead to a stronger dollar; however, the actual trend has been the opposite. Since President Trump's inauguration, the value of the dollar has fallen by more than 7%, and during the past week alone, which saw the announcement of reciprocal tariffs, it decreased by over 2%.
The dollar's weakness is also impacting the Government Bonds market. Recently, amid a sharp decline in the U.S. stock market, the influx of funds into Government Bonds and the dollar, which are traditionally seen as safe assets, has not been pronounced.
The Wall Street Journal (WSJ) noted that "it is unusual for the dollar and Government Bonds yields to show concurrent weakness during a stock market downturn," analyzing that investors might be showing changes in their confidence toward the U.S. unlike in the past.
The S&P 500 index has dropped 19% compared to its peak on Feb. 19, while the dollar index has decreased by 4.5% during the same period. The yield on U.S. 10-year Government Bonds has actually risen by nearly 0.25 percentage points this month.
The WSJ assessed that "the flow is difficult to explain by technical factors," stating, "A combination of concerns about a recession, uncertainty regarding the Federal Reserve's interest rate cuts, and deleveraging by hedge funds are all at play."