Best Stocks to Consider When the Dollar Weakens

When the US dollar loses steam, the investing landscape shifts in profound ways. Savvy investors who anticipate this trend can capitalize on sectors and companies that historically benefit.

By understanding the underlying forces eroding the dollar’s value and aligning your portfolio to ride these currents, you can turn currency headwinds into powerful tailwinds.

The Dollar’s Decline: Causes and Implications

Throughout 2025, the US dollar has experienced notable weakness, driven by expanding fiscal deficits, slowing GDP growth, and shifting trade policies. With deficits soaring above 120% of GDP, and growth forecasts targeted at 1.5%, the dollar faces sustained downward pressure against major peers.

Analysts at J.P. Morgan foresee the EUR/USD climbing toward 1.29, while the USD/JPY could slide to 114 over the next decade. This projected 10%-20% erosion in value invites investors to rethink asset allocations.

Commodity price inflation often parallels dollar declines: as dollars weaken, oil, gold, and base metals become more expensive in foreign currencies, driving prices upward. Meanwhile, export-driven companies and non-US equities gain an edge when translated back into depreciating dollars.

Investment Themes that Shine in a Weak-Dollar Environment

Positioning your portfolio requires focus on broad themes that outperform when the dollar sinks. The following ideas have delivered strong returns during past cycles of dollar weakness.

• U.S. multinational corporations with significant overseas revenue streams benefit from currency translation benefits.
• Non-hedged international stock funds capture robust international equities returns as foreign currencies appreciate.
• Commodity-linked assets and energy producers thrive amid rising raw material costs.
• Real assets such as real estate and infrastructure offer tangible inflation hedges when currency value erodes.

Each theme taps into distinct drivers: global trade competitiveness, currency conversion gains, or hard-asset valuation shifts. Diversifying across these vectors smooths volatility and enhances potential gains.

Specific Stocks and Funds to Watch

Below is a selection of standout names and vehicles that align with the themes above. Focus on entities with high foreign exposure or direct commodity linkages.

Philip Morris reported in Q1 2025 that its currency headwinds reversed, boosting earnings growth abroad. Similarly, energy giants and mining firms have announced profit upticks as commodity indices reached new highs.

Balancing Risks: Policy and Global Uncertainties

While dollar weakness can be advantageous, policymakers’ actions may complicate outcomes. The introduction of “Liberation Day” tariffs—10% on most imports and 145% on select Chinese goods—could mute export gains or raise input costs for manufacturers.

Investors should monitor potential retaliatory measures and be aware that rising import costs can feed into domestic inflation, prompting central banks to tighten monetary policy. Geopolitical tensions, particularly in trade and energy, add further complexity.

• Trade policy unpredictability may offset export-led growth benefits.
• Inflationary spikes could trigger higher interest rates.
• Currency swings sometimes coincide with market volatility.

Building a Resilient Portfolio

To harness the dollar-weakness trend while mitigating risk, investors should:

• Allocate across sectors: balance exporters, commodities, and real assets.
• Use non-dollar-denominated funds: favor diversification across currencies.
• Blend passive and active strategies to capture market inefficiencies.

Regular rebalancing is crucial. As currency moves and market valuations shift, dynamic adjustments ensure exposures remain aligned with evolving economic conditions.

Conclusion: Seizing the Dollar-Weakness Opportunity

When the US dollar weakens, it opens doors for investors who pivot to the right themes. From global exporters and commodity producers to international equity funds and real assets, targeted allocations can unlock strong returns.

Embrace a disciplined, diversified approach, stay attuned to policy shifts, and maintain agility. By doing so, you won’t simply weather the storm of currency fluctuations—you’ll harness it to propel your portfolio forward.