Plunging Dollar Leaves American Travelers With Less Buying Power This Summer
U.S. dollar’s decline in first half of year against peer currencies was steepest in more than 50 years
By Jack Pitcher and Joe Pinsker
The dollar has tumbled 13% against the euro this year. Photo: Eric Helgas for WSJQuick Summary
- The U.S. Dollar Index had its worst first half in 50 years, dropping against the euro and yen.
- Despite the dollar’s decline making overseas travel more expensive, many Americans are still traveling internationally this summer.
- A weaker dollar is expected to boost multinational companies’ earnings and make foreign stocks more attractive to American investors.
American tourists have grown accustomed to their dollars traveling well, too. This summer, they are getting a wake-up call.
The ICE U.S. Dollar Index, which compares the U.S. currency to a basket of six others, just posted its worst first half of the year in more than 50 years.
The dollar has tumbled 13% against the euro this year and 6% against the Japanese yen.
It is a stark reversal of the conditions that greeted American travelers and investors as recently as 2024, when a strong dollar lifted their purchasing power on imported goods, triggered a travel boom and fueled talk of America’s economic dynamism.
That was before the Trump administration’s trade policies, concerns over the growing national debt and the shrinking gap between interest rates in the U.S. and other major economies began to weigh on the dollar.
Many expect the world’s reserve currency to drop further.
And while its decline has made exports cheaper (a boon to U.S.-based industry) and opened opportunities for Americans to invest in foreign stocks, it has made traveling overseas more costly than it has been in years.
So far, many travelers are still packing their bags.
A quarter of U.S. consumers surveyed in May by Deloitte planned to travel internationally over the following three months.
That share had been mostly steady in each month since January and sits slightly higher than it did in May 2023 or May 2024.
Albert Tartaglia left for Spain on Sunday.
His family enjoys honey from around the world, and he stocked up when he was last there in 2022.
“I was just buying things to bring home—no thinking,” said Tartaglia, a 45-year-old accountant in Indianapolis.
Now that the exchange rate isn’t so sweet, he said he “might be inclined to limit what we get.”
A decade of a persistently strong dollar has been a scourge for multinational American companies.
When the dollar surged in the fourth quarter of last year, American corporate giants like Apple and Amazon.com took a significant earnings hit.
A stronger dollar makes American exports more expensive to buyers and erodes profits from overseas units when converted back to dollars.
Now, exchange rates are expected to be a boost for multinational companies as earnings season kicks off in earnest this week.
More than 40% of revenue from S&P 500 companies comes from international sales, and losses on currency conversions have been a consistent source of write-downs for U.S. companies for years.
“Exporters should really benefit from this,” said Lori Heinel, chief investment officer at $4.7 trillion asset manager State Street Investment Management.
A falling dollar also makes foreign stocks more attractive for Americans, who benefit from currency appreciation in addition to capital gains in their international stock funds.
After years of underperforming the U.S., international-stock benchmarks have been on a tear in 2025.
For American buyers of foreign stocks, the weaker currency is making those gains even better.
Foreign stocks typically need to be bought in the local currency, which can lead to a double-whammy of currency and stock gains when converted back into dollars.
Through July 3, an MSCI index of global stocks excluding the U.S. generated a dollar return of 19%, almost half of which came from currency gains.
That has been a tailwind for index-fund investors: Vanguard’s total international fund is up 17% this year, almost tripling the S&P 500’s 6.6% gain.
Many Americans have a higher exposure to U.S. stocks than advisers recommend, due to both preference and a lack of rebalancing after years of U.S. outperformance.
J.P. Morgan Asset Management’s chief global strategist David Kelly has been urging clients to diversify portfolios beyond the U.S. and thinks now is an opportune time to do so.
“The fundamentals have been gradually deteriorating beneath the economy of the dollar,” Kelly said.
“If we get some shock, the potential for a big dollar decline or big market decline is there, and people should be diversified with international stocks to deal with that.”
The weaker greenback’s positive investment implications are little solace to travelers.
An unfavorable exchange rate recently led Brandon Lowery to sample the menu at a Scottish McDonald’s.
The 46-year-old’s family of four went there for dinner while on vacation last month to avoid another restaurant bill of about 35 pounds to 50 pounds, or equivalent to roughly $50 to $70.
He said a chicken sandwich with pickled-onion chutney, not available at the chain’s U.S. locations, was “really good.”
Lowery, a community-college professor in the Houston area, checked the exchange rate while planning the trip in February, when £1 was worth about $1.25.
He realized on day two of the 11-day trip that a pound’s value had risen to about $1.35.
“For four people, that little percentage increase starts to tick up whenever it hits the credit card,” he said.
Trish Smith, a travel adviser in Kansas City, Mo., said her clients haven’t been deterred by a weaker dollar.
She said younger travelers want to visit “trending” destinations such as Bali and Japan while they are still hot, and older ones aren’t about to alter vacations they have been planning for years.
“A lot of times, they are, like, ‘It’s a bucket-list trip—we’re going anyway,’” Smith said.
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