I think the bigger problem is the reason why people are pulling back their money from US markets.

The yen has other reasons to be weak though, namely that Japan barely increased interest rates as compared to the US.

If a dollar used to equal 100 yen, and now the dollar is worth 162 yen, isn’t that moving opposite to the stated direction?

Donald Trump has stated that he wants to weaken the dollar. It seems that he is succeeding.

My guess is that he wants to make it more attractive when it comes time to refinance the large portion of American long-term debt. He also wants to keep the interest rates low for the same reason.

My questions is: What is causing the actual slide? The concrete mechanics and motivations that are causing people to sell USD.

>it would mean every country is supporting the US at the cost of devaluing themselves.

That's what they want as export based economies.

> Historically, the euro has generally been a good bit more valuable than the dollar. But in 2022, the dollar was more valuable than the euro at a point

That's what inflation does.

People are routinely taught that inflation is the “decline of value of money”, but that's not the reality. Inflation is just the increase in consumer price, which is perceived as a decline in the relative value of the money, but its absolute value on foreign markets isn't (directly) affected by inflation.

And when the Central bank raise the interest rate to cool the economy down and temper inflation, then the absolute value of the money rises (because the higher the interest rates, the pricier the currency on the FX market). This increase in the currency value in turn also helps fighting inflation because it lowers the cost of imported goods.

So, indirectly, because of the central bank's reaction, inflation is actually increasing the absolute value of money, and this is what we saw in 2022 when the Fed raised the interest rates 9 month or so before the ECB start doing the same (because the inflation came in advance for the US compared to EU).

> the dollar has been insanely overvalued post-COVID.

That's an odd way of saying the US doubled it's federal budget from $3T to $6T in response to COVID and has now ensconced this pork further into law. Under a "republican" administration, no less.

> The dollar losing its value is a return to the pre-covid norm.

Which is to say that even $3T contained an unjustified amount of debt spending just not as obscene as it is today.

> It's a high that can't last forever.

That's the "big beautiful bill" for ya.

European interest rates are crazy low, that's why.

Tariffs and a devaluating currency are a double whammy of inflation on imports.

It will be reflected in overall inflation statistics, and that limits the Fed’s ability to cut rates.

Low derivatives of US gdp per capita growth over the past decade feels like stagnation to the population.

Even if you own equities?

Totally agreed. My only hope is that the evil bastards who willed this to happen bear the suffering more.

This is spot on and cuts both ways. Much of the Japanese market's recent "performance" in US media is actually just yen weakness against the dollar. Strip out currency effects and the story looks very different. Same with European markets "performance" - we're often seeing monetary policy divergence rather than genuine outperformance in foreign markets.

Always check both local currency and USD returns when evaluating international markets.

Not in Australia. Our dollar has taken a beating too. I guess digging holes and selling property to each other at ever higher prices isn’t that interesting to the rest of the economic world.

Because stock market gains can't keep up with the lose of the dollars value? Assuming that you bought your stocks using Euros or some other currency?

As a Canuck who has seen these swings for decades of his life, with both our currency and the US dollar both contributing to this, I see nothing unusual in the current trends.

I take it that the "on track" is determined by extending a current downtrend as if it will continue precisely the same, for the next 6 months, which seems unlikely.

I get that with the recent passage of this US bill, people want to pile on. I can assure you, that Canadians have no love of the current administration. But this is another click-baitish thing being done to us all, feeding on people's upset, the time of year it is, the US holiday, and more.

Ah well.

Strike "the US" as well...

The inflation of 2021-24 was a biblical disaster for the working class, and it's nowhere near as bad now. I'd say that makes 2025 a marked improvement from the economic disaster of the last 4 years, and which was backed up in every political poll (economy was issue 1).

Approval poll numbers seem to indicate a plurality of US voters agree with much of what the current government is implementing and for the first time in a very long period the majority of US voters seems to think the country is on the right track. You may not like what Trump and his crew are doing but most people did not like what your preferred candidates were doing and planning to do. Given these numbers I'd say "your democracy" (which is a constitutional republic but I'll just borrow some of the oft-heard rhetoric from the "democratic" party) seems to be functioning quite well and certainly a lot better than under the previous regime when approval numbers were abysmal.

that index grew significantly in both those years...

Cheaper dollar boosts US exports. Makes imports more expensive even before tarrifs. Which situationally, some industrial sectors will want. The exporting ones. The ones reliant on imports, less such.

The US isn't self sufficient in food. Food imports are going to get more expensive.

Don’t they want a weaker dollar to bring manufacturing back to the US? If manufacturing jobs were up while service sector hiring fell, would that be proof that they are succeeding? Not good for the middle class, perhaps intentionally, but if you’re homeless and need a low skill manufacturing job you’re prospects are finally looking up.

> as much control over the people as possible

Also significantly increasing economic and financial stability (compared to the days of the gold standard with its permanent boom and bust cycles)

More about this: https://en.wikipedia.org/wiki/Nixon_shock

It's easy to blame an individual administration but the reality is pure fiat currencies will always end in this way. When was the last time the US had a balanced budget? Clinton? If you don't have a constraint on printing new currency you will always print more.

A good example I heard today was this. Imagine if you have a legit money printer. Show me the most pure human and eventually they will hit that button and print new money. That's what we've been doing for a long time now to finance all the wars and bailouts.

https://fred.stlouisfed.org/series/M2SL

A good book: https://www.lynalden.com/broken-money/

Then payments to Tim Apple will be more affordable!

> even more

They were extremely cheap, though? Even in richer Western European countries..

In most cases EU tech workers that work remotely for a US company get their invoices paid in USD (same with the outsourcing agencies), so I'd say no.

yeah but they're still >50% off SFBA salaries. SFBA comp for a sr dev can easily be $200k+ (and can go higher, lots of anecdotes on here about $350k+ salaries at BigtechCos), for an EU dev scratching 90k euro is considered "good". Devaluing the dollar by 10% and increasing the price of EU salaries by 10% doesn't really change the picture.

Dramatic inflation = growing stock market (all other things being equal).

Just look how great the Turkish stock market did since 2020. ~14x increase (in local currency)

Gold or other commodities would be the standard asset to go for if you expect dramatic inflation.

The entire world will experience dramatic inflation around 2040 when population decline starts spiraling down the population side of GDP shrinkage.

VXUS is a reasonable choice given those concerns.

No. Usually what happens is that your rates go up. It can mean your debt goes up.

Does that offset the One Big Beautiful Bill Act?

It literally shows that in the graph. A basket of the world currencies.

The flip flopping of the government is also a gigantic macroeconomic signal to not invest in the US as there is no long term prediction possible.

CHIPS act goes away, something else comes, trade deals are made, then tariffs, then no tariffs, then tariffs again.

You don’t offset a cheaper dollar against counter tariffs.

You’re one nationalization away from becoming the next Argentina.

Is the cost of food and housing going down?

Except from all the investors who are literally dumping dollars and treasury bonds and use other things to transact and store value.

Good luck getting loans & investments for your 100% American business ideas.

Hint: Go to any country that is not called the USA and try to get a $1M equivalent loan/investment for your startup and let us know how it goes.