The U.S. dollar is crumbling. In 2025, it hit a three-year low, driven by shifting trade policies and expectations of Federal Reserve rate cuts. This slide reflects deeper concerns about America's economic grip, Yahoo Finance reported.
Rapid U.S. policy changes and anticipated monetary easing have sent the dollar down nearly 10% against major currencies this year. Scandinavia’s currencies, particularly the Swedish and Norwegian crowns, have surged ahead. Meanwhile, Asian and European currencies are also gaining ground.
President Trump’s "Liberation Day" on April 2, 2025, sparked significant capital flows back to Asian manufacturing economies. Taiwan’s dollar jumped 10% over two days in May and is up 12% for the year. The Korean won has also climbed 10%.
Sweden’s crown has soared 14% against the dollar, its strongest performance in over 50 years. Norway’s crown gained nearly 12%, its best run since 2008. Despite lower oil prices, Norway’s currency holds firm.
Against the euro, however, Scandinavian gains are modest. The Swedish crown is up only 4%, and the Norwegian crown just 1.8%. Sweden’s expected rate cuts in June 2025 haven’t dented its currency’s strength.
Other currencies are also outpacing the dollar. The euro hit $1.1572, its highest since 2021, while the Swiss franc and Japanese yen each gained about 10%. The British pound rose nearly 9%, reaching a three-year high.
Switzerland faces unique challenges as its franc’s rise lowers imported goods prices. Inflation turned negative in May 2025, the first decline in over four years. This pressures the Swiss central bank to consider sub-zero rates.
“There’s clearly solid dollar selling,” said Kit Juckes, chief FX strategist at Societe Generale. He predicts the euro could reach $1.20, though warns it shouldn’t climb too fast. Rapid shifts risk deflationary pressures in Europe.
“In my heart-of-hearts we are going to get to $1.20,” Juckes added. He cautions that such a swift euro rise could disrupt economic stability. Investors must weigh these risks carefully.
Singapore’s dollar, Malaysia’s ringgit, and Thailand’s baht each rose 6% against the dollar. China’s yuan, tightly controlled onshore, gained 2% offshore. The U.S. Treasury’s latest report did not label China a currency manipulator.
Argentina’s peso, however, has plummeted 15%, among the weakest currencies in 2025. A new exchange rate regime in April, allowing the peso to float within a 1,000-1,400 range, hasn’t stemmed its fall. A $20 billion IMF loan offers some relief.
Mexico’s peso has rebounded to near its strongest levels since August 2025. Early pressure from U.S. trade policies has eased. This recovery highlights resilience amid global currency shifts.
The British pound’s 9% rise is tempered by softer UK economic data. Expectations of Bank of England rate cuts are growing, capping its rally. “Sterling is less appealing than others,” said Nick Kennedy, FX strategist at Lloyds.
Despite this, UK markets saw over $10 billion in bids for British companies on a single day in 2025, per Dealogic. This flurry of activity signals investor confidence. Yet, macro risks remain elevated.
Investors should stay vigilant. The dollar’s decline offers opportunities in stronger currencies like the Swedish crown or euro. But rapid shifts demand careful hedging and diversified portfolios to navigate volatility.