What a Weak Dollar Really Means for Your Portfolio

When the U.S. dollar weakens, it sets off a ripple effect across the entire financial system—from equity markets to commodity prices, and even to the strength of foreign economies. But if you’re just watching the headlines and thinking “bad dollar = bad market,” you’re only seeing half the picture. Let’s break it down.

Why the Dollar Matters More Than You Think

The U.S. dollar isn’t just America's currency. It’s the world’s reserve currency, the denominator for most global commodities, and the yardstick for international finance. So when the dollar falls, it does more than dent national pride—it reshuffles global capital flows.

In 2025, the U.S. Dollar Index (DXY) has dropped around 9% year-to-date, hitting a three-year low. This isn't just noise. It's a signal—especially for investors.

You might assume a weak dollar is good for U.S. stocks because it makes exports more competitive. That’s true in theory. But in practice? The data paints a messier picture.

The Numbers: What History Tells Us

Trivariate Research looked at 16 different periods since 2001 when the U.S. dollar weakened by at least 5%. Here’s what they found:

• The U.S. equity market underperformed during most of these periods, with median gains of just 7.5%—ranking sixth worst out of 55 global regions.

• Countries like Greece (+17.6%), Indonesia (+17.5%), and Peru (+16.4%) outpaced U.S. performance by a wide margin.

• Malaysia, South Africa, and Portugal were up in all 16 cases of dollar weakness. That’s remarkable consistency.

In other words: when the dollar dips, capital tends to flow out of the U.S. and into emerging and frontier markets where growth potential spikes.

So, Should You Be Worried?

Not exactly—but you should be paying attention. A weakening dollar doesn’t mean you need to sell everything and go off-grid. It just means your U.S.-centric portfolio might not be as bulletproof as it used to be.

Think of it this way: If your entire portfolio is built around U.S. tech giants, you’re playing the game on hard mode right now. Apple, for example, is down more than 8.5% just this month. The S&P 500 has dropped over 7% YTD, and the Nasdaq is leading that slide with a 10% decline.

Meanwhile, gold is hitting record highs, and foreign markets—especially commodity-driven ones—are quietly winning.

Where the Smart Money Is Moving

If you want to stay ahead of the curve, here are a few places to keep on your radar:

1. Global Equities

No, you don’t need to learn Polish or buy Indonesian ETFs tomorrow. But diversifying internationally has never been easier—or more necessary. Even small allocations to high-performing countries can reduce drawdowns and smooth out your overall returns.

2. Commodities and Precious Metals

A falling dollar typically sends commodity prices higher because those assets are dollar-denominated. Think gold, copper, oil. If you're concerned about inflation or currency devaluation, adding a bit of gold to your portfolio isn’t old-school—it’s practical.

3. Sectors That Thrive on a Weak Dollar

Historically, Metals & Mining, Consumer Finance, and Transportation Infrastructure have been the top performers during dollar downturns. If you're looking to stay in U.S. markets but want better positioning, these sectors are worth a closer look.

On the flip side, Biotech, Banks, and Healthcare Technology have historically lagged during weak-dollar periods. That doesn’t mean you should dump them, but you might want to rethink your weightings if you're overexposed.

How to Strategically Adjust Your Portfolio

Let’s make it real. If you're investing through Surmount, or any automated strategy-driven platform, here are some smart tweaks to explore:

• Rebalance into global strategies. Look for portfolios that include developed and emerging markets.

• Factor in currency exposure. Some ETFs hedge currency risk, while others don’t. Choose what fits your view.

• Add real assets. That includes commodities, real estate, and even infrastructure. These tend to hold value when fiat currencies don’t.

Also—don’t sleep on cash flow. When the dollar weakens, companies with international revenue (think: global brands) often see a bump in earnings. But those benefits take time to show up on balance sheets. Be patient.

The Big Picture

The dollar’s drop might feel like just another market headline, but it’s more than that. It’s a flashing signal that the investment landscape is shifting.

If you’re only focused on U.S. mega-cap stocks, you could be missing out on serious upside elsewhere. The good news? You don’t need to guess. You just need a strategy that adapts.

At Surmount, we build portfolios and strategies designed to shift with macro changes like this—so you don’t have to constantly guess the next move.

But it starts with understanding what’s happening now—and then making better decisions because of it.

The information presented is for educational purposes only and not an offer or solicitation for any specific investments. Investments involve risk and are not guaranteed. Consult with a financial adviser before making any investment decisions. Past performance does not guarantee future results.