Dollar falls 10% since early 2025

The dollar is one of those things people notice only when it starts messing with everyday prices. That is what is happening now. The big move was in early 2025, but the important part in May 2026 is that the drop has stuck. The U.S. dollar is still about 10% below where it was at the start of that slide, which means the pressure on travel, imported goods, and some food costs has not gone away. (abcnews.com) ### Why does a weaker dollar matter? A dollar is not just a dollar at home — it is also your buying power abroad. When the currency weakens, Americans get fewer euros, yen, or pesos for the same amount of money, and U.S. companies pay more for foreign-made inputs. That does not hit every price tag at once, but it slowly w(abcnews.com)he chain. (abcnews.com) ### What actually happened to the dollar? The sharp move came in the first half of 2025. The AP piece says the U.S. Dollar Index logged its steepest six-month drop in more than 50 years, and the New York Fed’s FX report shows the broad trade-weighted dollar fell 5.6% in Q2 2025 alone, leaving it down 7.5% for the year by (abcnews.com) the Fed’s broad dollar index was still sitting well below its earlier highs. (abcnews.com) ### Why did it fall so hard? Basically, markets started marking down the U.S. outlook. The New York Fed’s quarterly report ties the 2025 drop to weaker U.S. growth expectations, tariff announcements that were broader than investors expected, and a wider sense of policy uncertainty. Foreign investors also increased their c(abcnews.com)hey did not want to sit fully exposed to a falling dollar. (newyorkfed.org) ### Why do big companies like that? Because overseas revenue gets translated back into more dollars. If Coca-Cola, Philip Morris, or a hotel chain earns money in foreign currencies, a weaker dollar can make those sales look better in U.S. financial results. AP notes that executives have been calling this (newyorkfed.org)s, that is a tailwind. (abcnews.com) ### So who gets squeezed? Smaller domestic businesses get squeezed first if they import goods and mostly sell to Americans. Households feel it too, just more slowly. Think of it like a quiet markup at the border — not a tax bill in the mail, but a weaker exchange rate that makes foreign stuff cost more before it reaches a shelf or a booking site. That is why economists in the AP piece call it a hidden tax. (abcnews.com) ### Does this mean broad inflation is about to surge? Not automatically. A weaker dollar is one inflationary force, not the whole story. Companies can absorb some costs, switch suppliers, or wait before passing increases through. But if the currency stays weak, the effect lingers. The catch is timing — exchange-rate moves(abcnews.com)earlier. That is part of why this story matters now, not just in 2025. (abcnews.com) ### Is this always bad for the U.S.? No. A weaker dollar can help U.S. exporters because their goods become cheaper for buyers overseas. That is one reason some politicians and manufacturers tolerate — or even welcome — dollar weakness. But the tradeoff is pretty direct: exporters and global firms can benefit while consumers and import-reliant businesses pay more. (abcnews.com) ### Bottom line The news is not that the dollar just fell. It is that the fall from early 2025 is still with us. And when a weaker dollar sticks around, it stops looking like a market chart and starts looking like pricier groceries, pricier trips, and better earnings for the companies selling into the rest of the world. (abcnews.com)