As the U.S. dollar witnessed its largest two-day decline in over two years, an economist argues the importance of devaluation for global growth while another expert explains the weakness to as a symptom and not a cause.
What Happened: The macro strategist at Crescat Capital, Otavio Costa highlighted the dollar’s largest two-day decline in over two years in his latest X post.
While he said that the dollar was the “most overvalued” concerning other fiat currencies, he reiterated that it “needs to be devalued to restore global growth.”
However, according to Aditya Sesh, the founder and managing director at Basiz Fund Services, the weakness in the dollar was a “symptom and not a cause.”
Other economists like Peter Schiff said that the plans to form a Bitcoin BTC/USD strategic reserve in the U.S. could be a reason for “dollar’s demise,” saying that “ultimate winner will be gold.”
Why It Matters: Sesh said that “it is not surprising that the USD can come under pressure at various points in time,” while highlighting the following developments as the “symptoms”.
- Correction After A Period Of Strength: According to Sesh, the dollar’s recent strong performance against other major currencies makes it susceptible to a natural market correction.
- Fiscal Implications: A “review of public finance in the U.S.,” including cleaning up USAID and the spending cuts by the Department of Government Efficiency, “is a long time, arduous task”.
- Economic Slowdown Signals: Sesh also highlights economic weakness hampering the USD. According to him, declining indicators like the ISM Purchasing Managers Index, particularly the drop in new orders, suggest a potential slowdown in US manufacturing.
- Geopolitical And Infrastructure Burdens: Finally, the dollar’s reserve currency status, along with the need to renovate aging infrastructure, creates substantial financial obligations that can place downward pressure on the currency, according to Sesh.
Price Action: The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, fell in premarket on Thursday. SPY decline 0.87% to $577.96 and QQQ was down 1.10% to $496.48, according to Benzinga Pro data.
On Wednesday, the SPY declined 1.07% to $583.06, and the QQQ rose 1.30% to $502.01.
Read Next:
Photo courtesy: Shutterstock
Market News and Data brought to you by Benzinga APIs
© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
