The Dollar’s Drama & The Persistent Bull Market
The common narrative linking a weakening dollar to stock market woes simply doesn’t hold up under scrutiny. Despite anxieties, historical data reveals a surprisingly inconsistent relationship between the dollar’s strength and stock performance. As 1968, US stocks have enjoyed gains in 44 out of 56 calendar years, with roughly equal numbers occurring during periods of both dollar thankfulness and depreciation.This disconnect stems from the complex realities of the global economy. A weaker dollar can boost American exports, but concurrently increases the cost of imported goods – and the reverse is true when the dollar is strong. Crucially, multinational corporations are adept at mitigating currency fluctuations through complex hedging strategies, lessening the direct impact on their bottom lines.
Current concerns about the dollar’s recent decline are also arguably overblown. The dollar isn’t experiencing a uniquely weak period; in fact, it has been trading at levels considered “strong” for years. currently, the dollar’s value against a trade-weighted basket is higher than it has been for 58% of the time since 1970.
The anxieties surrounding the dollar seem to be a case of worrying nonetheless of the situation. A weak dollar triggers fears of rising import costs and inflation, while a strong dollar is perceived as detrimental to export-driven profits.Political rhetoric further fuels the debate. While US politicians traditionally champion a strong dollar, recent comments from former President Trump suggest a shift in viewpoint, acknowledging potential benefits from a weaker currency. This sentiment is echoed by his nominee for the Federal Reserve, Stephen Miran, who openly advocates for dollar devaluation and even questioning its status as the world’s reserve currency.
Interestingly, market behavior suggests investors are treating Trump’s policies as consistent with historical Republican trends. Since Richard Nixon’s presidency, the dollar has typically weakened during Republican administrations, strengthening only in their final year in office. The current dollar weakness, down 7.9% through July 2025, mirrors the decline experienced during Trump’s first term through July 2017 (-9.1%).
Ultimately, it’s vital to remember that currencies are always traded in relation to one another. Over time, the exchange rates between developed nations tend to stabilize, exhibiting a cyclical pattern. For the past four decades, the dollar has fluctuated within relatively narrow bands against most major currencies, with japan being the notable exception - and even there, the fluctuations have been contained for 35 years. These cycles naturally correct themselves, and there’s no reason to beleive this time will be different.
Therefore, while others fixate on dollar weakness, investors should maintain a broader perspective and continue to benefit from the ongoing global bull market.
Ken Fisher is the founder and executive chairman of Fisher investments, a four-time new York Times bestselling author, and a regular columnist in 21 countries globally.
