Bears claim you should fear US dollar “weakness”. They claim its 2025 plunge against the soaring euro, Swiss franc, British pound and other currencies reveal investors are increasingly fleeing US assets amid “risky” policy moves, US Federal Reserve independence fears and more. Exports of strong currency nations risk getting whacked, they say, claiming it all will slam economies, your wallet and global stocks.
Wrong. Despite common claims, developed nation currency swings predict little. Certainly not stocks’ direction. They never have. Neither is 2025’s dollar weakness – the core of current currency consternation – very unusual.
Weak or strong, currencies always scare people. When strong, they supposedly hammer corporate profits on exports or risk deflation.
A strong US dollar often triggers default fears in developing nations. They often borrow in dollars and a rising buck makes interest payments harder to meet.
Weak currencies are also feared fatal for stocks, making imports more expensive and stoking inflation. So, pick your 2025 poison.
The strong euro has surged 13 per cent surge against the dollar, the pound 7 per cent and the franc’s 14 per cent (all as of September 29).
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