In today’s trading sessions, Wednesday, April 9, 2025, the US Dollar witnessed a significant decline that raised many questions in economic circles, as the dollar index lost more than 0.72% of its value, to settle at 101.94 points. The decline comes just days after escalating trade tensions between the United States and China, following the current US administration imposing additional tariffs on electric vehicles imported from China by 25%, in addition to new regulatory restrictions on some biotechnology sectors. These developments have confused global investors and sounded the alarm about the stability of international trade relations.
A senior analyst at Morgan Stanley stated that these policies represent a shift towards “excessive economic protectionism,” which could backfire on the US economy itself, especially given the slowdown in GDP growth in the first quarter of the year. Technically, the dollar showed clear weakness against the euro, the Japanese yen, and the pound sterling, as the euro rose to $1.098, while the yen climbed to 147.6 yen to the dollar, in a sign of changing investor appetite. In addition, the country suffers from a financing gap, despite the recent support it received from the International Monetary Fund (IMF) worth $8 billion, as part of a long-term reform program aimed at enhancing competitiveness and improving the investment climate.
A member of the Federal Reserve also stated in a press interview this morning that “the coming monetary policies will be very cautious,” which was interpreted as the possibility of fixing or even cutting interest rates, which put further pressure on the dollar. On the other hand, investment flows towards gold, long-term US bonds, and some emerging market currencies increased, marking the beginning of a phase of shift in the balance of financial power globally.
Egyptian Pound Faces Pressure despite Decline in US Dollar Globally
In Egypt, the global decline of the US dollar was not enough to push the Egyptian pound upwards, as the dollar continued to rise domestically and recorded unprecedented levels in banks and exchange houses. Data released by the Central Bank of Egypt indicates that the average exchange rate of the dollar was EGP 51.26 for buying and EGP 51.38 for selling, while some private banks, such as the United Bank and CIB, maintained relatively high levels of EGP 51.74.
This phenomenon is due to several intertwined factors, mainly the crisis of foreign currency shortage in the local market, and the increasing demand for dollars by importers, in light of the slowdown in imports of basic commodities and the delay in customs release. In addition, the country suffers from a financing gap, despite the recent support it received from the International Monetary Fund (IMF) worth $8 billion, as part of a long-term reform program aimed at enhancing competitiveness and improving the investment climate.
However, the implementation of the program’s provisions still faces realistic challenges, including inflation of more than 32% in some commodities. In the same context, the Egyptian economy faces challenges related to the decline in tourism revenues, which were affected by the regional situation, and the decline in remittances from Egyptians abroad by 14% compared to last year. These developments have confused global investors and sounded the alarm about the stability of international trade relations.
In terms of monetary policy, the domestic market is awaiting new moves from the central bank, which may include increasing interest rates to control inflation and support the pound, or resorting to more flexible solutions such as linking the pound to a basket of currencies instead of the dollar only.
Global markets recalculate amid declining confidence in US Dollar
As the US dollar continues to weaken, signs of a major fiscal transformation are beginning to loom large, amid clear moves by global central banks to reduce their dependence on the US currency as a core reserve. In Europe, the European Central Bank stated today that “diversification of reserves has become a strategic priority,” pointing to the increase in the proportions of gold and Chinese yuan in sovereign portfolios. Russia has also signed a new trade deal with India based in part on settling payments in rubles and rupees instead of dollars, which analysts saw as a further step toward reducing the dollar’s influence in global trade.
At the same time, Asian banks, especially in China and Japan, are rushing to support their local currencies by injecting liquidity into the market and raising domestic interest rates, fearing waves of inflation coming as a result of higher prices of imported goods denominated in dollars. Cryptocurrencies have also witnessed a qualitative leap, as the value of Bitcoin rose by 5.6% in the past twenty-four hours, recording more than $ 74,000, amid increased demand from large institutions that see it as a potential alternative to the dollar.
Also, stablecoins such as USDT and USDC rose 11%, reflecting the shift of liquidity to them from traditional markets. As for retail investors, new trends are emerging towards diversifying their portfolios between gold, commodities, cryptocurrencies, and non-US equities, to avoid the impact of dollar fluctuations. The IMF warned in its quarterly report that continued erosion of confidence in the dollar could spark global monetary chaos unless major currencies reach a balancing mechanism. It is clear that the world stands on the cusp of major changes in the international financial system, and the dollar is no longer immune to accountability or future challenges.
