The U.S. dollar weakened broadly during 2025, but that does not prove the decline was deliberately engineered—and it did not continue in a straight line. The Federal Reserve linked part of the early-2025 move to investors reassessing U.S. growth prospects amid changes in trade policy. By July 2026, the Fed reported a modest net increase in its broad dollar index since the start of the year.
What the claim means—and what the data show
The headline comes from Carrie McCabe’s April 21, 2025 Forbes contributor commentary. McCabe argues that the dollar’s weakness reflects political ambition and changing global confidence, and discusses a proposed “Mar-a-Lago Accord” as a possible effort to lower the currency to improve U.S. manufacturing competitiveness. That is an interpretation of policy intent, not an established finding that policymakers deliberately caused the decline. McCabe’s commentary is independent contributor analysis, not an official government assessment.
The numbers depend on which measure and dates are being compared. McCabe reported a decline of more than 8% against a basket during the opening part of 2025, using the ICE U.S. Dollar Index framing, and characterized it as the index’s worst start in four decades. The Federal Reserve’s broad trade-weighted index and Treasury’s nominal trade-weighted measure use different baskets and periods, so their figures are not interchangeable.
| Measure and period | Reported movement or level | Source and qualification |
|---|---|---|
| ICE U.S. Dollar Index framing, opening part of 2025 | More than 8% decline | McCabe’s Forbes commentary; her reported figure and historical characterization. |
| Treasury nominal trade-weighted dollar, four quarters through June 2025 | 3.8% weakening | U.S. Treasury, January 2026 FX Report. |
| Treasury nominal dollar, end-2024 through end-October 2025 | 6.0% depreciation | U.S. Treasury, January 2026 FX Report. |
| Treasury real effective exchange-rate level, end-October 2025 | 14.2% above its 20-year average | U.S. Treasury, January 2026 FX Report; this is a real level relative to an average, not the nominal decline. |
Treasury also found that currency pairs did not all move alike: from end-2024 to end-October 2025, the dollar depreciated by at least 10% against several currencies, but appreciated against the Vietnamese dong and Indian rupee. “The dollar” is therefore a shorthand for a set of exchange rates or an index, not a single price moving identically against every currency. The Treasury report distinguishes these nominal and real measures.
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Why did the dollar weaken?
The Federal Reserve said that, since early 2025, changes in U.S. trade policy reportedly led investors to reassess U.S. growth prospects relative to those of other major economies. That offers a plausible market channel: if investors expect weaker relative growth or greater uncertainty, demand for dollar assets can shift. The Fed’s account does not establish that trade policy was the only cause, quantify its independent contribution, or prove a deliberate plan to push the dollar lower. The June 2025 Monetary Policy Report also noted that the broad dollar remained elevated in real terms relative to its historical average despite the decline.
McCabe’s argument connects the decline to a possible “Mar-a-Lago Accord” and to a strategy of improving U.S. manufacturing competitiveness through a weaker currency. That thesis should be kept separate from the documented market movement: the official sources establish declines over specified periods and report investor reassessment, but do not confirm that an agreement was implemented or that policymakers caused the full decline. McCabe’s conclusion that “The long arc is defined by confidence” is her framing of the issue, not a measured government finding.
What a weaker dollar can mean for households and businesses
Exchange-rate effects depend on the currency pair, contract terms, pricing decisions, demand, and how quickly buyers and sellers adjust. The direction of the basic pressure is clearer than its eventual size:
- Imported goods and inputs: When a foreign currency strengthens against the dollar, goods priced in that currency tend to cost more in dollars. Importers may absorb the added cost, pass some of it on, or change suppliers. Consumers may feel the effect through prices, but the exchange-rate move does not translate automatically or immediately into a fixed increase in retail prices.
- Exporters: A weaker dollar can make U.S.-priced goods less expensive for overseas buyers, potentially supporting demand. Whether sales rise depends on foreign demand, competitors, contracts, and capacity—not just exchange rates.
- Companies earning revenue abroad: Foreign-currency earnings can translate into more dollars when converted, all else equal. The benefit varies with a company’s costs, hedging, and the currencies involved.
- Foreign economies: A stronger local currency against the dollar can reduce local-currency costs for dollar-priced imports, while affecting exporters’ competitiveness. The impact differs across countries and sectors.
These trade-offs make “a weak dollar helps manufacturing” too broad as a blanket claim. Some producers may benefit from improved price competitiveness, while manufacturers that rely on imported components or equipment can face higher costs. The reviewed official figures do not provide one universal pass-through estimate for consumers or a single net manufacturing effect for this episode.
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Could dollar weakness threaten Treasury demand or reserve status?
McCabe warns that diminished confidence could weaken demand for U.S. Treasuries, raise borrowing costs, and damage the dollar’s reserve standing. These are risks in her argument, not outcomes established by the exchange-rate figures cited here. A dollar decline alone does not show that Treasury yields rose because of it, nor that the dollar lost its reserve-currency role. Treasury’s finding that the real effective exchange rate remained 14.2% above its 20-year average at end-October 2025 is also a reminder that a decline from one point does not necessarily mean a historically weak level.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Is the dollar still falling?
Not according to the latest direction described in the available Federal Reserve reports. The Fed’s July 2026 Monetary Policy Report said its broad dollar index had increased modestly on net from the start of 2026 through July 2, despite volatility, and remained strong in real terms relative to its historical average. The October 1, 2026 G.5 release reports September monthly index values—not percentage changes—of 119.2152 for the broad index, 112.7920 for advanced foreign economies, and 127.4285 for emerging market economies, with January 2006 set to 100.
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Those index levels are useful for tracking the Fed’s weighted measures over time, but they do not by themselves show the dollar’s change since the start of the year. To assess a claim about dollar strength, identify the index or currency pair, the start and end dates, and whether the measure is nominal or inflation-adjusted. The Federal Reserve publishes its broad, advanced-economy, and emerging-market indexes alongside bilateral averages in its G.5 Foreign Exchange Rates release; its July 2026 report provides the broader trend assessment.
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