Dollar Crash of Over 30% Incoming? Goldman Sachs Issues Stark Warning

The U.S. dollar may be headed for deeper losses, according to Goldman Sachs’ chief economist Jan Hatzius, as a storm of tariff tensions, recession fears, and declining investor confidence converge.

Having already shed 4.5% in April — its sharpest monthly fall since 2022 — the greenback has dropped 8% year-to-date against a basket of major currencies. Hatzius, writing in the Financial Times, believes the dollar’s depreciation is far from over and warns of potentially dramatic implications.

“With all due humility, I believe that the recent dollar depreciation of 5% on a broad trade-weighted basis has considerably further to go,” Hatzius said.

Read This Also: Why the World Is Moving Away from the Dollar? Republic Business Explains

He draws historical parallels to the mid-1980s and early 2000s, where similar dollar valuations preceded a 25–30% decline. The current environment, he suggests, reflects similar vulnerabilities. The IMF estimates global investors hold $22 trillion in U.S. assets — one-third of which may be exposed to currency risks. If foreign appetite for U.S. assets wanes, it could cause further damage to the dollar.

A weaker dollar might help narrow the trade deficit and offer short-term relief from recession risks by boosting U.S. exports. But Hatzius cautions that this benefit may be outweighed if the drop is driven by broader economic pessimism and dwindling capital inflows. With a current account deficit of $1.1 trillion, the U.S. economy depends on consistent foreign investment — a pause could send shockwaves through financial markets.

The weakening dollar has reignited debate about its long-term status as the world’s reserve currency. Yet Hatzius dismisses any immediate threat. “Barring extreme shocks, we think the dollar’s advantages as a global medium of exchange and store of value are too entrenched for other currencies to overcome.”

Still, banks like Deutsche Bank are eyeing stronger performances from rivals like the euro, predicting it could rise to $1.30 by decade’s end — up from $1.13 currently.

As America’s economic outlook dims and policy uncertainties linger, the dollar’s decline may no longer be temporary turbulence but the beginning of a structural shift.