Bank of America has issued a warning that the U.S. dollar is poised to decline further this summer, following a significant drop of nearly 9% this year. The dollar index, which measures the greenback against a basket of major currencies, has fallen to 99.74, influenced by escalating trade tensions and policy uncertainties under President Donald Trump's administration.
This depreciation is attributed to several factors, including the administration's tariff policies, rising national debt levels, and signs of an economic slowdown indicated by high-frequency data. The weakening dollar is expected to benefit dollar-denominated assets such as gold and bitcoin, as investors seek alternatives amid the currency's decline.
Investor sentiment reflects growing concern, with 61% of fund managers in Bank of America's April 2025 Global Fund Manager Survey anticipating further depreciation of the dollar over the next year. This shift has led to a reallocation of portfolios away from U.S. assets, with gold emerging as a preferred investment amid rising risk aversion.
As the dollar continues to weaken, it may have broader implications for the global economy, influencing trade balances, inflation rates, and investment strategies worldwide.
