Dollar Weakens Sharply, 35-Year Record Broken In Currency Market; Emerging Economies Like India May Benefit

Mumbai: The global currency market witnessed a historic shift as the US dollar saw a major fall, breaking a 35-year record. The sharp decline was driven by concerns over former US President Donald Trump's proposed 100 per cent tariff policies and speculations around a potential trade deal. Currencies like the Japanese yen, euro, and especially the Taiwanese dollar, gained significantly against the US dollar.

The Taiwanese dollar surged to 28.81 per USD, a level not seen since the 1990s. This 5 per cent rise is the highest in 35 years. Market experts believe Taiwan is allowing its currency to appreciate deliberately to strengthen its position in ongoing trade negotiations with the United States.

Asian Currencies Gain Ground

This development triggered a ripple effect across Asia. Other regional currencies such as the Australian dollar, Chinese yuan, and South Korean won also gained against the US dollar. The US Dollar Index fell to 99.93, its lowest in recent months, signaling widespread weakness in the greenback.

Market Uncertainty Due to US Policy

Investors are cautious due to Trump’s tariff-centric policies and new taxes proposed on foreign companies. These factors are injecting a high level of uncertainty into global markets. Moreover, the upcoming US Federal Reserve meeting is also keeping investors on edge, although it is expected that the Fed may keep interest rates unchanged.

Despite a mild improvement in the US service sector, with the PMI index rising to 51.6 in April, the dollar continued to lose ground due to market focus shifting toward currency dynamics and international trade talks.

Positive Signs for India

This development can be favorable for India and other emerging markets. A weaker dollar typically leads to cheaper imports, easing inflation pressures. It may also attract increased foreign investment, offering support to the Indian economy. However, much depends on how US tariff and interest rate policies evolve in the coming weeks.