The U.S. dollar has fallen over 9% this year, driven by growing uncertainty around U.S. economic policy. Investors are pulling out of U.S. assets, pushing the dollar lower and strengthening other major currencies in response.
Currencies like the Japanese yen, Swiss franc, and euro have all appreciated by around 10–11%. Emerging market currencies such as the Mexican peso and Polish zloty have also gained, while the Russian ruble has surged more than 22%. However, not all currencies have benefited — the Vietnamese dong, Indonesian rupiah, and Turkish lira recently hit record lows against the dollar.
A weaker dollar generally eases pressure on other countries, especially those with large amounts of debt in dollars. It also helps reduce inflation by making imports cheaper, giving central banks the space to lower interest rates and stimulate growth. According to analysts, most central banks would welcome a 10–20% decline in the dollar.
Still, there are trade-offs. A stronger local currency can hurt exports, especially in Asia where economies rely heavily on trade. With rising U.S. tariffs, competitiveness becomes a bigger concern. That’s why central banks must carefully balance the benefits of a strong currency with the risks it poses.
In some cases, the option of devaluing their currency is being considered — particularly in Asia and other emerging markets. But this path is risky. Currency depreciation can fuel inflation, trigger capital outflows, and attract criticism or retaliation from trade partners like the U.S.
For now, most central banks are avoiding direct devaluation. Institutions like the European Central Bank and Swiss National Bank are cautiously adjusting policy to respond to inflation trends, but without aggressively weakening their currencies.
Experts agree that unless global trade tensions escalate further, central banks will likely continue treading carefully — seeking stability over short-term currency advantages.