US dollar in danger after worst half-year since the 1970s... here's how it'll shrink your wallet

Daily Mail​

08-07-2025

America's currency just had its worst half-year performance since the Nixon era.
That could mean higher prices for everyday Americans.
The dollar dropped more than 10 percent against major global currencies from January to June, according to the US Dollar Index.
It's the worst first-half showing since the index began tracking the greenback in 1973. For decades, the dollar has served as the world's financial safe haven.
Economists warn the weaker dollar could keep inflation stubbornly high, even as consumer prices cool in other areas of the economy.
'A depreciation in the US dollar is inflationary,' Ryan Sweet, the chief US economist for Oxford Economics, told Newsweek.
'The depreciation in the dollar increases the risks that tariffs boost consumer prices more than anticipated this summer and into the fall.'
Take, for example, the cost of car parts from best-selling Japanese brands like Toyota, Honda, and Nissan.
When the dollar weakens against the Japanese Yen, it takes more dollars to buy the same part from an overseas supplier.
That can push up Americans' repair bills, parts prices, and insurance. It also increases manufacturing costs in the US, where many factories depend on globally sourced components.
Similar price pressures are showing up in other industries that rely on imports — like food, electronics, and clothing.
Coffee from Colombia, apparel from Vietnam, and even roses from Ecuador — all products that have nearly no US manufacturing — can become more expensive and trickle down to consumers at the checkout line.
Bret Kenwell, US investment analyst at eToro, told DailyMail.com there is a mix of good and bad with the dollar's dip.
'A falling dollar can be a good thing for large multinational companies, as it boosts their earnings in non-dollar currencies,' he said.
'However, importers can struggle as it now takes more dollars to buy the same goods as before. For these reasons, many companies look to hedge their currency exposure — especially in volatile environments.'
While a weaker dollar may help exporters compete abroad, it's also reshaping how everyday investors move the money in their portfolios.
A new survey from trading platform eToro found that 58 percent of American retail investors are adjusting their portfolios in response to the dollar's decline.
More than a quarter are pulling back from US stocks and shifting into gold and cryptocurrency — two assets often viewed as hedges against inflation and currency risk.
Younger investors were especially bullish on gold, the survey found. Trust in the US market is also starting to slip from all-time highs.
The dollar has traditionally been seen as safe haven currency for international investors.
But rising national debt, increased inflation, higher interest rates, a wobbly political landscape, and a focus on US manufacturing has chipped away at its long-term dominance.
Some creditors are even worried the US might not be able to service some of its debts.
But top White House advisors say the dollar's long-term strength has come with tradeoffs for US jobs.
Vice President JD Vance has frequently said that dollar dominance has had the reverse impact on countries that want to buy goods built in the US.
A Ford F-150 built in Michigan, for instance, costs significantly more for a customer in Japan than for one in the States.
'If you want to employ a lot of people in manufacturing, you need to make it easier for us to export and not just import what we need,' Vance told Politico.