If you feel as though markets and news are moving at the speed of light lately, you are not alone. Whether it’s the influence of 24/7 financial news, accessibility to news flow at all times (on our phones, watches, computers, etc), the activity from the federal government, other factors, or some combination of the above, you’re not alone in feeling this way. It has been A LOT.

There seems be a new market narrative/worry every few hours. One catching headlines this week is the weakening US dollar. While there are clear market impacts when the US dollar declines, I caution you from buying into the idea that the US dollar (and America) are “dead.” Those headlines get attention but let’s instead spend our time looking at what we know for sure. As is always the case, things are never as good or bad as they seem.

What has happened to the dollar?

The US dollar’s value relative to other currencies has declined, reaching 4+ year lows. The dollar is down 11% in the past year, with over half of that decline coming in 2026.

The US dollar being lower compared to other currencies is often referred to as a “weaker dollar.”

What moves a currency’s value relative to others?

As with all other asset prices, it’s fundamentally a “supply and demand” equation. The US dollar is the world’s reserve currency. The supply/demand dynamic can be altered by many factors including interest rates, economic outlooks for markets/countries, and general sentiment.

If interest rates are higher in the US than other countries, foreign countries need to buy dollars to buy US treasuries (thereby raising demand). The inverse is also true. If investors view the US market as more attractive with better return potential than foreign markets, they need to acquire USD to invest, again increasing demand. The inverse is also true. And finally, as with any asset, sentiment can play a role

As of late, there has been less demand for US debt and US based investments, both leading to less demand for dollars.

Is this in line with the current administration’s objectives?

President Trump has always been in support of a weaker dollar. As outlined below, a weaker dollar tends to lead to a lower trade deficit and more on shored manufacturing – clear objectives of the administration

What does a weaker dollar mean?

There are a few important impacts to keep in mind

1. Impact on trade – a weaker dollar makes imports more expensive (you need more USD to buy the same amount of foreign goods), perhaps sparking more on shore manufacturing (although this takes time). The US remains an import-driven economy so this may result in ongoing price increases and a repeat performance of inflation. On the flip side, US goods become cheaper for foreign buyers
2. Impact on earnings – For large multi-national US companies with considerable earnings from foreign countries, a weaker dollar can boost their earnings. Why? A lower US dollar makes goods cheaper for foreign buyers, perhaps boosting sales. It also boosts earnings as profits earned abroad translate into more dollars when brought home. Main winners include consumer discretionary, technology, and pharm companies
3. Impact on hard assets – The prices in real assets (ie: metals, oil) tend to rise – both over fears of dollar devaluation (and the counter argument that you cannot devalue these assets) as well as the fact that these assets are priced in dollars (weaker dollar makes them more expensive)
4. Impact on portfolios – foreign markets tend to outperform (due to currency conversion tailwind), providing ongoing benefit to asset class diversification

Is the US dollar at risk of losing reserve status?

This theory is certainly gaining momentum. To quote Wall Street Journal reporter Greg Ip – “I just don’t buy it.” It’s easy to buy into the fear mongering and the USD decline has undoubtedly been unsettling. However, until there is a viable alternative to the US dollar, I believe you can direct your worrying elsewhere – like figuring out how to adjust your portfolio and investment approach for this new dollar dynamic.