Business

IIE DIGITAL DESK :The US dollar witnessed a sharp decline in April 2025, as global investor sentiment turned negative amid increasing concerns over the economic stability and fiscal direction of the United States. A series of mixed economic indicators, controversial trade decisions, and rising fears of a potential recession have led to a significant erosion of confidence in US financial markets, triggering a global ripple effect in currency markets. The dollar index, which measures the greenback against six major currencies, fell by 0.7%, touching a three-year low and sending shockwaves through emerging market economies.

The Indian rupee was not immune to these developments. While the currency initially weakened, falling nearly 0.9% during the week, it later rebounded slightly due to the broader dollar weakness. The rupee closed at 86.04 per dollar on Friday, gaining 0.7% in a single day, as investors reacted to the news of China imposing fresh tariffs on US goods, escalating trade tensions. Despite volatility, the rupee remained relatively resilient compared to other Asian currencies due to continued foreign portfolio investments and stable macroeconomic fundamentals.

Other global currencies, including the euro, Japanese yen, and Swiss franc, gained as investors moved toward traditional safe-haven assets. The yuan showed modest gains as China’s economic outlook appeared more stable in comparison. Analysts suggest that unless the US government implements measures to restore investor confidence, the dollar could face further pressure, leading to increased currency market volatility worldwide.

This sharp depreciation of the US dollar is likely to influence monetary policy stances globally, especially in emerging economies. It could also increase import costs in countries with weaker currencies, adding inflationary pressure.