By a0amdn62263@outlook.com 
Washington/New Delhi, July 2025 — The world’s strongest currency, the US Dollar, is reeling under one of its sharpest collapses in five decades, sending shockwaves through global markets. Since Donald Trump’s return to office in January 2025, the greenback has lost nearly 11% in the first half of the year, marking its steepest semi-annual fall since 1973. From its 52-week high, the dollar is now down over 13%, shaking its long-held image as a “safe haven” currency.
📉 Why Is the Dollar Falling?
1. Unpredictable Economic Policies
Trump’s aggressive trade policies — including the “Liberation Day” Tariffs — and his open criticism of the Federal Reserve’s independence have rattled investor confidence.
According to Bloomberg, foreign investors dumped American assets, slashing their positions in U.S. equities and treasury bonds, dragging the Dollar Index down by 10.8% in just six months.
His expansion of the “Big Beautiful Bill Act” (which cuts taxes but slashes health and welfare spending) and a projected $3.3 trillion rise in debt have triggered fresh concerns over fiscal sustainability. The U.S. debt-to-GDP ratio is forecast to jump from 124% to as high as 156% by 2034.
2. Credit Rating Downgrade
In May 2025, Moody’s downgraded the U.S. sovereign credit rating to Aa1, citing soaring interest burdens and sustained fiscal deficits. Foreign investors, holding $31 trillion in U.S. assets (including $19T in equities and $7T in treasury bonds), began offloading their positions, further weakening the dollar.
3. Fed Rate Cut Expectations
With political pressure mounting, the Fed is expected to cut interest rates 2–3 times by the end of 2025, reducing the dollar’s appeal to global investors.
💸 What It Means for You: Global & Indian Impacts
1. Gold Soars to Record Highs
Ajay Kedia, President of Kedia Commodities, says central banks are buying gold heavily amid dollar weakness and geopolitical uncertainty.
Gold prices touched a record $3,345/oz in 2025. With rising trade friction, large amounts of gold were moved from Switzerland to COMEX (USA), pushing COMEX gold inventory to 300 tons, a post-COVID high.
India’s gold reserves touched $60.66 billion in May, up by $480 million in just a week. The gold lease rate in London also jumped to 5% in Jan, before settling back to 1% now.
2. Crude Oil Imports Get Cheaper
For countries like India that import crude, a weaker dollar (and relatively stronger rupee) means lower import bills and better control over inflation.
3. Cheaper Electronics & Capital Goods
The strengthening rupee will make imported electronic goods, fertilizers, and machinery cheaper, helping manufacturers and consumers alike. The gems and jewelry sector also stands to gain due to reduced import costs.
4. Lower Fertilizer Costs, Boost to Farmers
India imports a large portion of its fertilizers and agrochemicals. With a stronger rupee, importers pay less, leading to lower costs for farmers and potentially higher agricultural income.
⚠️ Sectors That Could Take a Hit
1. IT Services
The Indian IT sector earns heavily in dollars. A stronger rupee means reduced revenues, squeezing margins and profitability.
2. Pharma Exports
Though India imports raw materials for drugs (which will become cheaper), its pharma exports may shrink, impacting overall earnings in this sector.
3. Textile Industry
India, the second-largest textile exporter, could see reduced competitiveness if the rupee strengthens, making exports costlier.
4. Foreign Education & Travel to Cost More
A stronger rupee ironically means higher expenses for students studying abroad or those planning overseas travel, due to rising local inflation in Western countries and reduced currency advantage.
🌐 Big Picture: A Dollar-Driven Domino Effect
The once-untouchable US dollar is now at the heart of global economic recalibrations. With Donald Trump’s policy decisions reshaping global capital flows, countries like India are witnessing both relief and risks. While imports are becoming cheaper, export-heavy sectors brace for impact.
As the Fed prepares for possible rate cuts and Trump’s fiscal expansion plans deepen deficits, the dollar’s fate in the second half of 2025 remains uncertain — but one thing is clear: The world is watching, and recalculating.