The US dollar delivered the weakest performance among major world currencies in 2025, with the dollar index declining about 10% year to date and ranking as the weakest among developed-market currencies.
Analysts point to a combination of Federal Reserve monetary policy and US trade decisions as the main drivers of the depreciation. Repeated interest-rate cuts reduced the attractiveness of dollar-denominated assets for investors, while newly imposed tariffs heightened market uncertainty and added downward pressure on the currency.
A weaker dollar provided a boost to exporters. US goods became cheaper for foreign buyers, helping exports rise by about 5% in the first nine months of the year to roughly $125 billion. Growth in export-oriented sectors also supported employment in manufacturing and agriculture.
Large multinational corporations benefited as well. Firms in the S&P 500 recorded higher profits from overseas operations when converted back into a depreciated dollar. Analysts suppose that this dynamic has offered additional support to equity markets.
The currency’s decline, however, weighed on American consumers. Higher prices for imported goods increased inflationary pressures. In November, consumer inflation measured 2.7% year-over-year, above the Fed’s target, eroding household purchasing power.
Tourism patterns also shifted. Outbound travel for US residents became noticeably more expensive, while the United States became relatively more affordable for foreign visitors amid the dollar’s weakness.
