Why the U.S. Dollar’s 2025 Decline Is Fueling Inflation, Shaping Investments, and Impacting Global Markets
The U.S. dollar has experienced its largest decline since the 1970s, dropping around 11% in the first half of 2025 and signaling the end of a long bull market cycle. This depreciation is expected to continue, potentially adding another 10% loss by the end of 2026, driven by converging U.S. and global interest rates and economic growth. The weakening dollar is fueling inflation by increasing import prices, making travel abroad more expensive for Americans, and impacting global markets by reducing the attractiveness of U.S. assets to foreign investors. However, it also benefits American exporters by making U.S. goods cheaper internationally. Investors are seeing international stocks outperform U.S. equities, partly due to currency effects, while the overall inflation outlook is pressured by higher import costs and tariffs. This currency trend is reshaping investment strategies, inflation dynamics, and global economic relationships in 2025 and beyond.


