DENVER — There are concerns about the stability of the United States debt and spending, according to the financial firm Morningstar.
“Expectations are high for the dollar to lose its leading reserve currency in the next five to 15 years,” Morningstar said in part.
The value of the U.S. dollar is off to its worst start since 1973, according to new data that shows it’s fallen by 10.8%.
The value fluctuates daily, usually by imperceptible levels, but what causes that? Like so many things in economics, financial analysts say it comes down to supply and demand.
“Whether it's the dollar against the euro, the dollar against pound, the dollar against the yen, all of our trading partners that moved that dollar decline accelerated after the April 2 tariff announcements,” Colorado financial advisor Bruce Allen told Denver7.
When people or businesses need U.S. dollars to invest, trade, make contracts — whatever it may be — in the U.S., they need U.S. dollars. This creates demand and therefore increases the value of our country's currency.
It also helps that for decades ,the U.S. dollar has been the international reserve currency. During global economic uncertainty, investors have historically moved money into U.S. assets as they’ve been seen as stable.
This is still the case, but financial analysts worry that may not be for much longer. That waning confidence affects how other countries buy and trade our assets.
It also affects the power and financial privileges our country has been afforded for having that status, such as borrowing money more easily and imposing financial sanctions, according to the Council on Foreign Relations.
However, the S&P continues to climb to record highs after April’s steep downturn, rising more than 1,200 points in that time.
