In the past, the US dollar has often benefited from crises. Because insecure investors then increasingly turned to safe forms of investment, which usually included the US dollar – after all, the entire strength of the US economy is behind the greenback. But of all things during the corona pandemic, the dollar is weak. The ICE US Dollar Index, which compares the value of the US dollar using a basket of six currencies, fell by up to around 4.2 percent in July.
Investors are losing confidence in the US dollar
This dollar weakness is related to dwindling investor confidence. On the one hand, the USA is having great problems getting the spread of the coronavirus under control, after the danger has been downplayed for a long time and in some cases it still is. For US President Trump, the pandemic is extremely inconvenient in the 2020 election year, which is why he has urged the rapid normalization of economic life. But this carelessness is now taking its toll and the USA is now the country with the most fatalities worldwide – with correspondingly negative consequences for the economy. On the other hand, investors are also very concerned about the escalating budget deficit. Because in order to cushion the economic stresses of the Corona crisis, Washington has decided on aid programs of historic proportions, which are, however, debt-financed.