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The Dollar Faces The Biggest Drop In Half A Century, While The Demand For Gold Increases, The Influence Of The Brics Grows, And Political Tensions In The United States Intensify. The Currency Remains Dominant, But Its Position Creates New Uncertainties.
The dollar is undergoing, in 2025, the largest depreciation in over half a century, accumulating a 11% drop in the first half of the year in the index created by the Federal Reserve (Fed) to measure its strength against currencies such as the euro, Japanese yen, and British pound.
According to BBC News Brazil, the negative performance has reignited questions about the sustainability of the hegemony of the U.S. currency, particularly in light of changes in international reserves, geopolitical pressures, and the economic policy adopted by the Donald Trump administration.
Drop In Foreign Exchange Reserves
A report from J.P. Morgan released in July shows that the share of the dollar in central bank foreign exchange reserves has fallen from over 70% in the early 2000s to about 57% in March 2025, according to data from the International Monetary Fund (IMF).
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Though it is still predominant, this loss of space coincides with the growth of the renminbi, whose share has doubled in ten years, yet remains around 2%.
The main change, however, is in the advancement of gold as a store of value. Among emerging markets, the metal now represents 9% of reserves, a percentage more than double that recorded in 2015.
Analysts believe this movement reinforces the search for assets considered less susceptible to political and currency risks.
Trade And US Treasury Bonds
International trade also shows signs of monetary diversification.
The sanctions imposed against Russia have boosted oil transactions in local currencies, allowing countries like India, China, and Brazil to purchase derivatives with payments outside the dollar sphere.
This indicates a growing space for other currencies in strategic sectors such as energy. Another point of attention is the market for U.S. Treasury bonds.
Traditionally considered safe-haven assets, they have been losing foreign participation for 15 years. Before the 2008 crisis, over 50% of these securities were held by foreign entities; today, the figure is close to 30%.
According to J.P. Morgan, this reduction reflects a global reassessment regarding the safety of holding large volumes in dollars.
Devaluation And Turbulence In The Stock Markets
The American currency has been accumulating successive losses since 2024, when it had already recorded its worst drop since 1973.
After a brief recovery in July 2025, it fell again in August, and Morgan Stanley forecasts an additional contraction of up to 10% by 2026.
The scenario worsened in April, when U.S. stocks faced the worst week since the pandemic, with the S&P 500 index retreating 10%.
The impact spread globally, leading to a decline of more than 12% of the dollar against the real in Brazil.
The trigger was Trump’s announcement of a universal 10% tariff on imports, along with specific surcharges, such as the 50% tax applied to Brazilian products in August.
Since then, foreign investors have withdrawn about US$ 63 billion from shares of companies listed in the U.S., according to Goldman Sachs.
The same movement is affecting Treasury bonds, fueling the perception of instability.
Instability In The Fed And Criticisms Of Trump
Experts point out that the tariff policy and the use of the dollar as an instrument of international sanctions have increased distrust towards the currency.
As highlighted by BBC News Brazil, Robert McCauley, a researcher at Boston University, reminds us that the exclusion of Russia from part of the international financial system and the freezing of Russian assets have shaken the idea of the dollar as an unassailable safe asset.
At the same time, the U.S. public debt reached US$ 35.46 trillion in 2024, equivalent to 123% of GDP, fueling concerns that the government may, in the future, push for currency devaluation to reduce deficits.
The Fed itself is going through a delicate moment.
Trump has been constantly criticizing the central bank and even announced the dismissal of Lisa Cook, a member of the committee responsible for setting interest rates, a measure that she is contesting legally.
The presidential statements against Jerome Powell and other officials reinforce the perception of political interference, something that, according to economists, could further alienate international investors.
Brics And The Dedollarization Agenda
The debate around alternatives to the dollar is not new but has gained momentum since the 2008 crisis.
According to Fernanda Brandão from Mackenzie Presbyterian University, that episode exposed the vulnerability of relying on a single global currency.
The Brics, which expanded its membership with ten new members since 2024, has become the main proponent of dedollarization measures.
In July, at the summit held in Rio de Janeiro, President Luiz Inácio Lula da Silva reiterated the defense of using national currencies in trade among the countries of the bloc.
He argued that “no one has determined that the dollar is the standard currency” and emphasized that the replacement is likely to be irreversible.
Russia, for its part, is already betting on its own digital payment platform to escape the sanctions.
The bloc is also discussing the creation of a common currency, a possibility that worries Washington to the point that Trump characterized the initiative as “an attack on the dollar.”
Contradictory US Strategy
The measures of the U.S. government have been seen as ambiguous.
While Trump treats the defense of the dollar as a national sovereignty issue, his tariff policy and statements from advisors suggest an openness to weaken the currency.
Stephen Miran, appointed by Trump to the Fed Board of Governors, argues that the overvaluation of the dollar harms the American industry by making exports more expensive and encouraging the transfer of production abroad.
This view supports the idea that devaluation could be beneficial for the productive sector.
Still, economists such as Kenneth Rogoff from Harvard University consider the argument limited, noting that the U.S. trade deficits have multiple causes and cannot be solved merely through tariffs or currency manipulation.
Dollar Still Without Immediate Rival
Despite the signs of diversification, analysts emphasize that there is no currency capable of completely replacing the role of the dollar in the short term.
It remains dominant in international transactions, bank deposits, and global liquidity.
Even China, which could be a natural candidate, keeps a significant portion of its international financing in dollars, which, according to McCauley, shows practical resistance to replacement.
Russia, for its part, faces difficulties in completely removing the American currency from its financial system.
According to BBC News Brazil, the lingering question is whether the current movements are merely marginal adjustments or if they represent the beginning of a structural transformation in global finance.
To what extent is the world willing to reduce its dependence on a currency that, despite the turbulence, is still seen as the king of international markets?
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