What a weakening dollar means for Trump - and the UK

The weakening of the US dollar has arguably been the story of the year for financial markets.

The mighty greenback is the world's reserve currency by virtue of the fact that so many nations and investors hold it. But it has taken a mighty tumble under the Donald Trump 2.0 presidency - to the point this week that the dollar index, which measures it against six other major currencies, is down 9% this year and on course for its worst annual performance since 2017.

Money latest: New blow for Musk as Tesla sales plunge It is no coincidence that that decline also took place under a Trump-controlled White House. The reasons for it are similar, but against a far weaker domestic and global economic backdrop than seen last time round.

Why is the dollar falling? It all forms part of the wider investor turmoil over the president's trade war, its implications for the US economy and, crucially, the impact of his agenda on the public finances. The main cause for concern recently had been the potential for recession in the world's largest economy due to trade war import duties - tariffs - stoking inflation.

The fallout has damaged the potential for interest rate cuts by the US central bank - a scenario that would normally be supportive of a currency. But attention has increasingly turned towards the US budget deficit and total debt pile, given Mr Trump's controversial tax cut and spending hike plans.

Independent figures suggest they will add about $2.4trn to the $36.2trn total for US government debt - a debt pile that has become more expensive to service. ???? Follow Trump100 on your podcast app ???? This isn't good news for Trump's popularity, surely? It's fair to say weaker stock markets, bond sell-offs and a weaker dollar are not the reactions the president wants to see at the start of his second term.

For all the headline-seeking slogans of "America First" and "Make America Great Again.