The dollar is holding up (for now) in Trump's first year.

BarcelonaThe first year of Donald Trump's return to the US presidency has seen a notable decline in the value of the dollar and an increase in US debt interest rates, but by no means can it be considered an unprecedented fall. Despite Washington's threats to close US allies—such as Denmark—the trade war, military interventions in Venezuela and Iran, and attacks on the independence of the Federal Reserve (the Fed, the US central bank), the greenback has leveraged its dominant position as a safe-haven currency to maintain its strength.

Specifically, between January 20, 2025, the day Trump took office as president, and the same date in 2026, the dollar's exchange rate against the euro fell by 11.2%. This is a significant figure, but it cannot be considered a historic decline. In fact, on January 20 of this year, one dollar was worth 85 euro cents, a price slightly higher than that recorded during the first weeks of Joe Biden's presidency in January and February 2021. Later, with the Democrat in the White House, the US currency weakened when Europe suffered a severe inflationary crisis caused by the Russian invasion of Ukraine and the resulting increase in energy prices.

So far, the relatively slight fall of the dollar in the currency markets contrasts sharply with the high degree of instability and uncertainty that Trump's policies have caused both domestically in the United States and internationally. It's worth remembering that, in just one year in the White House, Trump has turned his back on all other NATO allies and the main US trading partners in Asia, such as Japan and South Korea, both through threats to Denmark's territorial integrity over Greenland and through escalating tariffs. Instability has also stemmed from the capture of Venezuelan President Nicolás Maduro, the bombings in Iran, support for Israel in the Gaza conflict, and tensions between the entire US administration and Ukrainian President Volodymyr Zelensky, while Trump attempts to negotiate a peace agreement with Russian President Vlad. Domestically, the most notable element in economic policy has been the attacks on Federal Reserve Chairman Jerome Powell, since the independence of central banks from governments is considered one of the pillars of monetary policy in developed countries. Trump has openly criticized Powell, arguing that the Fed is not lowering interest rates enough (a measure that encourages economic growth but simultaneously increases prices), and threatened to fire him, despite not having the constitutional authority to do so. Furthermore, despite campaign promises to reduce debt and inflation, official data shows that, at least in this first year, the US president has not succeeded. He also disliked the employment figures, which indicated an increase in unemployment, and in August he fired Erika McEntarfer, head of the public agency that calculates them. Beyond economic policy, Trump has instituted raids by masked police officers to arrest and deport immigrants (including minors) and has deployed the National Guard to several cities with Democratic mayors under the pretext of excessive crime or traffic crises. The dollar maintains its momentum.

In the face of these 12 months so fraught with radical changes and controversies, the dollar has lost value, but it remains higher, for example, than it was in January 2008, when it was worth less than 70 euro cents. Normally, such a short period of such stability would have led to greater panic regarding the strength of the US currency, especially with a president at the helm who antagonizes both foreign partners and enemies and threatens the institution that is supposed to guarantee the soundness of US public finances and the currency itself.

"Part of it is inertia," says Joan Ribas, professor of economics at Pompeu Fabra University. Although there are some signs that the dollar may be losing the guarantee of stability that all foreign investors once perceived, the loss of confidence "doesn't happen overnight." In this sense, an individual investor can unload their dollars or US debt securities in a few hours, but for large companies or central banks that control their countries' foreign exchange reserves, it's not so simple.

Firstly, because the dollar remains the most widely used currency in commercial transactions, something that political instability in the United States could also erode over time, but which still holds true. This means that, whether they like it or not, companies need dollars to buy products in other countries or have to accept dollar payments from customers. According to data from the Bank for International Settlements, approximately half of all global trade transactions are conducted in US dollars. Secondly, it's important to note that, despite creating uncertainty and clearly increasing the costs of international trade with tariffs, the global economy has continued to function. The US maintains robust growth, the EU has recovered its economic activity, and China is also registering positive rates. Trump, therefore, "has done damage, but it hasn't been as real," adds Ribas; rather, the damage so far has primarily affected the confidence of economic actors. An ideological basis for devaluing the dollar

Another noteworthy point is that the new US administration doesn't seem particularly concerned about the status of its currency. The reason, Ribas points out, is that some of Trump's economic ideologues, such as Michael Pettis and Stephen Miran, believe a strong dollar is detrimental to the US because it makes American exports to other countries "more expensive." Therefore, they "wouldn't mind" if the dollar lost importance globally, as they believe its position as the world's reserve currency makes it "overvalued," negatively impacting the competitiveness of US companies. This view contrasts with that of most economists, both liberal and Keynesian (who favor government intervention), who argue that controlling the world's reserve currency is a strength, as it allows the US to borrow with very low risk.