ABC NewsVideoLiveShowsShopLog InStream onUS dollar is off to its worst start in 50 years. Here's why that matters for you.A weaker dollar will impact everyday purchases and travel abroad, analysts said.ByMax ZahnJuly 2, 2025, 2:05 PM0:55A sheet of freshly printed one dollar bills is ready for inspection at the Bureau of Engraving and Printing, March 24, 2015, in Washington, D.C.Mark Wilson/Getty ImagesThe United States dollar is suffering its worst start to a year in more than five decades, likely triggering a price hike for some everyday items and a jump in expenses faced by travelers abroad, some analysts told ABC News.The greenback has fallen more than 10% in value this year relative to a group of foreign currencies that belong to top U.S. trading partners.Investors have fled U.S. dollars out of fear inflation could devalue the currency, especially as Congress has moved forward with a large spending bill set to worsen a decades-long trend of ballooning U.S. debt, analysts said.Even more, they added, President Donald Trump’s fluctuating trade policy and sharp criticism of the Federal Reserve have prompted uncertainty about the nation’s economic stewardship, eroding trust in the dollar as the world’s preeminent “safe haven” asset.MORE: Sean 'Diddy' Combs trial updates: 'Diddy' not guilty of racketeering in split verdictHere’s what to know about the weakening of the U.S. dollar and what it means for you:Why has the U.S. dollar weakened this year?The value of the U.S. dollar – like most assets – is set by supply and demand.For decades, the U.S. dollar has garnered eager demand due to the strength and stability of the U.S economy, which offers foreign investors a safe place to park their funds. In periods of global economic or political crisis, the U.S. dollar often receives a burst of interest from asset holders.As a result, the value of the U.S. dollar has proven robust for generations.The unusually sharp decline at the outset of this year owes in part to concern about a resurgence of inflation, which would reduce the spending power of the dollar and put downward pressure on its value, analysts said.Trump’s tariff policy has stoked worry about price increases, since importers typically pass along a share of the tax burden in the form of higher prices. A potential increase in the national debt could also push up inflation, as the U.S. issues bonds to cover the cost burden.“If I’m a central bank holding half a trillion dollars of U.S. Treasuries, essentially the value of that would decline with more inflation if I don’t take action now. If I think it might happen, I might shift to other assets like gold or the [Japanese] yen.”Investors’ faith in the continued stability of the U.S. economy has also diminished, analysts said, pointing to growing U.S. debt, fluctuating tariffs and Trump’s attacks on the central bank.Paolo Pasquariello, a professor of finance at the University of Michigan, attributed the decline of the dollar to “the recent erratic policy making by U.S. authorities.”U.S. Treasuries, Pasquariello said, are no longer viewed as quite as safe an asset, meaning investors are less likely to “park their money during normal times and especially during times of distress.”European Council President Antonio Costa, Japan's Prime Minister Shigeru Ishiba, Italian Prime Minister Giorgia Meloni, French President Emmanuel Macron, Canada's Prime Minister Mark Carney, U.S. President Donald Trump, British Prime Minister Keir Starmer, German Chancellor Friedrich Merz and European Commission President Ursula von der Leyen pose for a family photo during the G7 Summit, in Kananaskis, Alberta, Canada, June 16, 2025.Suzanne Plunkett/ReutersWhat does a weaker U.S. dollar mean for you?A weaker U.S. dollar could result in higher prices for imported goods and steeper costs for travelers abroad, analysts said.The anticipated rise in prices for U.S. consumers stems from the uptick in costs faced by importers paying for goods in U.S. currency. A foreign firm would likely demand a higher price since the dollars paid by a customer carry less purchasing power than they previously did, analysts said.“If you’re buying light fixtures from a firm in India and they’re taking dollars, and they get fewer rupees for those dollars, they're going to start to charge more dollars,” Richard Michelfelder, a professor of professional practice at Rutgers University, told ABC News.The potential surge in the price of imports could compound the inflation risk posed by tariffs, analysts said, but the dollar-related price hike would hit just about every import entering the U.S.“If you go online and buy a product that doesn’t come from the U.S., the price is likely to go up,” Michelfelder said.MORE: Trump admin live updates: Trump's megabill faces key test voteA weaker dollar also means U.S. travelers abroad are likely to face higher costs since what’s in their pocket will exchange at a lower rate with foreign currencies, analysts said.“If it takes more dollars to buy a euro and you’re going to Europe, everything you buy will cost more,” Michelfelder said.The decline in the dollar does deliver some benefits, however. Foreign buyers face lower prices for purchasing U.S. goods, meaning exporters could receive a boost as their products become more competitive on the global market.The favorable outcome for exporters could improve employment in industries like car manufacturing or advanced technology, while the relative strength of foreign currencies could bring additional tourists and expand the hospitality sector, Michelfelder said.Related TopicsEconomySponsored Content by TaboolaPopular ReadsRFK Jr. wants everyone to use wearables. What are the benefits, risks?Jul 3, 5:28 AMCongressional intern killed in Washington, DC shooting: OfficialsJul 3, 2:20 PMMom intentionally leaves 9-year-old daughter in hot car, child diesJul 3, 11:58 AMHiring unexpectedly surges in June amid Trump's tariffsJul 3, 5:23 AMABC News Live24/7 coverage of breaking news and live eventsABC News NetworkPrivacy PolicyYour US State Privacy RightsChildren's Online Privacy PolicyInterest-Based AdsAbout Nielsen MeasurementTerms of UseDo Not Sell or Share My Personal InformationContact Us © 2025 ABC News, The US dollar is on track for its worst year in modern history and may not be done falling yet. The greenback is down more than 7% this year and Morgan Stanley predicts it could fall another 10%., US dollar is off to its worst start in 50 years. Here's why that matters for you. A weaker dollar will impact everyday purchases and travel abroad, analysts said..