US Dollar hits three-year low

The US dollar has plunged to its lowest level in three years, rattled by escalating political turmoil and deepening trade tensions. The Dollar Index (DXY), which measures the greenback against a basket of major currencies, fell to 98.117 on Monday, marking a 5.7% decline in April and a 9% drop since the start of the year.

Investor confidence has been shaken by President Donald Trump's intensified criticism of Federal Reserve Chair Jerome Powell. In recent Truth Social posts, Trump labeled Powell a "major loser" and demanded immediate interest rate cuts, fueling concerns about the Fed's independence. Speculation about Powell's potential removal has further unsettled markets.

The dollar's decline has been mirrored by gains in other major currencies. The British pound rose to $1.3423, its highest level since September, while the euro and Swiss franc also strengthened.  In Asia, the Japanese yen appreciated, with the dollar falling to a seven-month low of ¥140. 

US stock markets have responded negatively to the dollar's slide and political uncertainties. The Dow Jones Industrial Average dropped 971 points (2.5%), the S&P 500 fell 2.4%, and the Nasdaq Composite declined 2.6%, driven by significant losses in tech stocks like Tesla and Nvidia

Global leaders are expressing concern over the US's economic direction. UK Chancellor Rachel Reeves and Japan’s Finance Minister Katsunobu Kato are heading to Washington for the IMF Spring Meetings, where they are expected to advocate for global free trade and reduced US tariffs on their countries' goods.

Analysts warn that continued political interference in monetary policy and aggressive trade measures could further erode confidence in the US dollar. Without clear policy direction and stabilization efforts, the greenback may face prolonged weakness, impacting global markets and economic stability