Sophie Stuart-Menteth
United States President Donald Trump’s latest challenge to the Federal Reserve (Fed, America’s central bank) by launching a criminal investigation into Fed Chairman Jerome Powell over a US$2.5 billion renovation of the Fed’s headquarters has brought the question of the US dollar’s trajectory into sharp focus.
Trump’s second term has seen the renewed politicisation of America’s ‘exorbitant privilege’ – as the issuer of the leading reserve currency that also accounts for around half of global trade invoices – through policies that include the widespread use of tariffs and sanctions, as well as threats to the Fed’s independence. These policy shifts, together with high US public debt and a deteriorating US fiscal outlook, have heightened uncertainty about the US currency’s long-term stability. As 2026 brings US midterm elections in November and the nomination of a new Fed chairman (expected in January), concerns about the US dollar are set to grow.
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