Did Trump get his ‘Big Beautiful Bill’ at the US dollar’s expense?
Analysts say the sweeping budget act resolves the immediate debt crisis, but the resultant deficit could accelerate global de-dollarisation
The passage of a sprawling budget bill has raised concerns over the long-term debt of the United States, which analysts said could compound already heightened worries over the reliability of the country’s currency as a safe-haven asset.
It is also set to raise the federal government’s debt ceiling by US$5 trillion, surpassing the US$4 trillion allocated by an earlier version of the bill. This creates more room for the Treasury Department to borrow to repay future obligations, but allows for greater debt accrual in the future.
“In the months leading up to the bill’s passage, investors had already been discussing how to diversify risk and reduce their exposure to US dollar assets,” he said.
Even without the bill, Yeung noted, momentum for diversification has been building in a number of countries.
“Part of it stems from concerns over US debt risks, but it’s also driven by a broader rethinking of the US dollar’s role as a global reserve currency under Trump’s protectionist policies,” he said.
Though US Treasury Secretary Scott Bessent said the bill will set the stage for a “coming Golden Age” and deliver “certainty and stability” for the economy, global investors and analysts have warned of a looming “debt bomb” and global economic downturn.
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US House passes Trump’s bill, sending it to White House for president to sign