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The Short Answer

What a Weakening Dollar Really Means for Investors

Currency fluctuations do have short-term effects, but most long-term investors can safely tune them out.

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Question: I keep hearing that the dollar is weakening. What does that mean for investors? Will stocks decline, too?

Answer: The U.S. dollar has been on the decline this year. From a high of 0.96 at the start of 2017, the greenback fell to a low of 0.88 versus the euro on May 22. That's a slump of more than 8%. The Trade Weighted U.S. Dollar Index, which measures the strength of the U.S. dollar relative to other world currencies, has also slid 3.7% over the year. (Some perspective is needed, though: Both levels are high relative to those over the past 10 years.) 

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Karen Wallace does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.