With all the tarifs coming in place and the US economy literally burning before our eyes it seems like other countries dollar is crashing but the US dollar stays high. Why is that?
With all the tarifs coming in place and the US economy literally burning before our eyes it seems like other countries dollar is crashing but the US dollar stays high. Why is that?
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its been only a few days in a massive upheaval that only started like two months ago. It takes time for the ripples to be felt with the economy.
Because other countries’ economies are burning too. Tariffs hurt everyone, not just the USA.
It sort of is. It is down 5% compared to the Euro since Inauguration Day. For a currency as stable as the US$, that’s crashing.
And keep in mind, that exacerbates stock drops. Essentially adding 5% more loss to them.
Probably because the US dollar is the de facto global currency.
That means when most countries do international business with each other, they tend to pay in US dollars.
This allows the US dollar to have a very high value and be extremely stable.
However, with this recent spree of tariffing every country on the planet, countries may choose to trade in other commodities or currencies if it doesn’t end soon. Even still, that may not be enough.
When and if that happens, you will likely see the value of the US dollar drop.
It’s only been like 4 days since the tariff package. Give it time.
Remember when gold was the most per ounce it’s ever been? The most dollars an ounce of gold ever cost?
That was the dollar “crashing” or going down.
It’s Sunday. Check back at 10am tomorrow (EST)
I’m not an expert, so these are my 2 cents.
Currencies are relative so if every currency is crashing, then the changes are based on who crashes more compared to the other currencies and the USD as the top dog is likely to fare better than any other individual currency.
The US economy is likely to crash, and the stock market has already crashed, but the actual economy in terms of jobs and spending hasn’t really crashed. If the economy itself collapsed already, you wouldn’t see for example the Minecraft movie doing record numbers at the box office. Movie theatres would be dead.
From my understanding, a lot of current global trades (even those that don’t involve the US) are traded in USD. For now, the USD is the dominant global reserve currency in about 60% of the world’s central bank reserves for the majority of global trade.
China and Russia are currently moving toward relying less on the dollar, which takes time to transition out of. If the USD shows to be less stable, more will likely follow suit. For now, the USD is propped up by consumerism – which makes our economy really strong but not stable if spending stops. The average debt is roughly 1.5 to 2x its annual income. The government operates with a debt-to-GDP ratio of about 120% which is also not sustainable. We rely on the stability of our dollar and global position so the bubble doesn’t pop.