The U.S. dollar has declined by approximately 11% year-to-date through the end of June 2025, marking its steepest first-half drop in over 50 years. Among other things, this weakness is driven by expectations of Federal Reserve rate cuts, fiscal policy uncertainty, and concerns about rising deficits. The implications are wide-ranging and important for both consumers and investors to understand.
But let’s take a moment to zoom out: in a multivariate world, it can be fun—and dangerous—to think, “If the dollar weakens, then X will happen.” Unfortunately, it’s rarely that simple. Yet sometimes, it is. I personally think dollar weakness is one of the biggest stories unfolding this year. If it continues, combined with shifting global trade dynamics, things could get interesting fast.
Implications for Consumers
✅ Higher Imported Goods Prices
A weaker dollar makes foreign goods more expensive. Electronics, cars, clothing, and other imports may cost more, contributing to lingering inflation.
✅ Costlier Travel Abroad
International travel becomes more expensive for Americans, as fewer euros, pounds, or yen are received for each dollar. (I wish I’d gotten in more international trips while the dollar was stronger—alas, I’ll be hiking more in the western U.S. for now.)
✅ U.S. Manufacturing Advantage
On the positive side, a weaker dollar can boost American manufacturing and exports, supporting domestic job growth in these sectors.
Implications for Investors
✅ Tailwind for Multinationals and Commodities
U.S. companies with significant international sales often benefit when foreign revenues convert back to a weaker dollar. Commodities like oil and gold also tend to rise in value during dollar declines.
✅ Boost to International Equity Portfolios
As the dollar weakens, the value of foreign currencies rises relative to the dollar. This means that international stocks held by U.S. investors become more valuable, enhancing overall portfolio returns. Recent eye-popping returns in some international markets, and the rush by some investors to diversify into foreign currencies, gold, bitcoin, or foreign bonds, are signs that people are waking up to a potential trend reversal.
✅ Hedging Inflation Risks
Real assets—gold, real estate, TIPS—may gain appeal as hedges if dollar weakness continues to stoke inflationary pressures.
A Nuanced Perspective
The big question, of course: Is this a head fake or the start of a sustained trend? Diversifying away from U.S. dollar assets is rarely a bad idea for diversification’s sake, but diversification alone doesn’t guarantee higher returns—which is why many U.S.-centric investors have historically shied away from international or commodity-heavy allocations.
I once debated this with an older former hedge fund manager—someone worth a heck of a lot more than me—who never saw the point of international investing since he never needed to convert his dollars abroad (he didn’t travel). But in a global world, even if we never leave the U.S., we’re converting dollars to imported goods. If the dollar weakens, our purchasing power drops, and when tariffs rise on foreign products, it can feel—if not actually become—more inflationary.
Throw in recent soft job data suggesting the Fed might cut rates sooner, which itself could further weaken the dollar, and you start to see a complex web of crosscurrents: some factors pushing inflation up, others pulling it down.
And yet, all in all, I remain generally optimistic. Some softness in the U.S. economy may rebalance global dynamics. I want a strong U.S., but I also want a strong world. A growth mindset—believing we can expand the pie rather than fight over a fixed one—benefits everyone.
Looking Ahead
Whether the dollar continues to decline will depend on future Fed decisions, fiscal policy outcomes, and global investor sentiment. For investors who’ve ignored international or hard-asset investing because of volatility or lagging returns relative to U.S. stocks, now may be the time to revisit your thinking. At the same time, remember that U.S. multinationals you probably already own can benefit from a weaker dollar—every headwind for some can be a tailwind for others.
Our job at Members’ Wealth is to keep all this in context, helping you navigate these complex dynamics with a disciplined, long-term approach.
Members’ Wealth will continue to monitor these developments and help clients position portfolios accordingly.
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Dane Czaplicki is CEO of Members’ Wealth, a boutique wealth management firm that offers a comprehensive approach to serving individuals, families, business owners, and institutions. The firm’s goal is to preserve and grow its clients’ wealth to endure over time, while thoughtfully evolving its strategy to suit an ever-changing world. With over 20 years of wealth management experience, Dane and the Members' Wealth team thrive on bringing clarity and confidence to clients' unique situations. He believes everyone needs sound financial advice from someone whose interests are aligned with theirs, and is determined to put service before all else.
Dane received his MBA from The Wharton School of Business at the University of Pennsylvania and his bachelor’s degree from Bloomsburg University. Outside work, he enjoys spending time with his wife and kids, hiking and camping, reading, running, and playing with his dog. To learn more about Dane, connect with him on LinkedIn.
Brian Carr is a Chartered Financial Analyst (CFA) with over 20 years of experience in investment manager research. Brian has a strong track record of identifying investment opportunities and making investment recommendations. Brian and Member’s Wealth Founder, Dane Czaplicki were analysts and Co-Portfolio Managers together earlier in their career, having started and successfully managed a multi-manager limited partnership for high-net-worth individuals and families.
In his previous roles, Brian was responsible for analyzing and conducting investment manager due diligence on alternative and traditional investment strategies. He’s provided oversight of recommendations of U.S., international and alternative strategies. Brian applies qualitative and quantitative analysis to identify successful investment firms and products for inclusion in client portfolios.
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