Dollar could face deep decline in 2026 – Standard Chartered

According to Standard Chartered, the risk of a serious dollar depreciation will rise next year if Trump's policies increase the US debt burden but fail to stimulate the economy.

The US federal debt, including debt owed to foreign investors, have risen in recent years. That puts the dollar and Treasuries at risk of losing credibility, as the experts of the bank believe. Foreign creditors will be concerned about the sustainability of the debt if tariff and tax policies fail to stimulate economic growth. Their concern could manifest itself as a risk premium or in the form of higher rates, they add.

At the moment, foreign investors are hesitant to completely shed traditional safe haven assets while waiting for the impact of Trump's policies to influence the GDP growth, according to Standard Chartered. The tax bill could help the economy this year if approved. However, the bank’s analysts suggest the boost is likely to disappear by mid-2026.

According to their estimates, investors will be reluctant to further increase their dependence on the dollar if trade policy remains unsustainable. This would potentially lead to a pronounced weakening of the dollar. Improving economic growth prospects in China and Europe may create even more pressure to sell the US assets.