The US dollar is quietly slipping from its position of unquestioned dominance—and investors who fail to adapt risk being left behind.

That’s the message from Jake McLaughlin, Executive Director at deVere Portugal, part of one of the world’s largest independent financial advisory organisations, who says many individuals are underestimating the scale of change now underway in global currency markets.

“This isn’t a short-term dip. It’s a long-term structural rebalancing. Investors need to start adjusting their portfolios accordingly.”

The greenback has had its weakest start to the year since the global financial crisis, falling over 4% on the Dollar Index (DXY).

Factors driving the decline include growing expectations of multiple US interest rate cuts, a return to protectionist trade policies, and rising geopolitical tension under the Trump administration.

But behind the headlines lies a bigger trend. The dollar now accounts for less than 59% of global central bank reserves, according to IMF data—down from over 70% just two decades ago.

This slow but steady erosion is being driven by both strategic diversification and political discomfort with the dollar’s global leverage.

For investors, this shift brings both opportunity and risk.

“Dollar dominance shaped international investing for generations,” McLaughlin says. “But that foundation is now evolving. Savvy investors are starting to rethink their exposure—not just to the dollar itself, but to assets and markets heavily tied to it.”

Opportunities beyond the greenback

As the dollar weakens, other currencies are stepping into the spotlight—and that means fresh opportunities for globally minded investors.

The euro, for example, has surged more than 4% against the dollar in recent weeks. This reflects growing confidence in the eurozone’s fiscal integration and its appeal as a safe, stable store of value. With collective EU defence and investment measures gaining traction, the euro is increasingly seen as a credible reserve alternative.

In Asia, currencies like the Japanese yen, South Korean won and Singapore dollar are also drawing interest. The Chinese yuan, while less liquid, is gaining global relevance as Beijing expands trade agreements that sidestep the dollar entirely.

“None of these currencies will ‘replace’ the dollar outright,” McLaughlin notes. “But together, they represent a growing mosaic of alternatives that are changing the global investing landscape.”

This diversification opens up tactical options: investors may consider increasing allocations to foreign-denominated bonds, international equity funds, and currency-hedged assets designed to take advantage of dollar weakness. For retirees and expats, income strategies linked to stronger currencies could also offer resilience and purchasing power over time.

Risks for the unprepared

However, this shift also introduces new complexities. Currency volatility can erode returns if not properly managed. Assets priced in dollars—from US tech stocks to Treasuries—could lose appeal if the currency continues to decline, especially in an environment of falling yields.

McLaughlin points out that the Fed is now expected to cut interest rates as many as three times this year, reducing the yield advantage that has historically made US assets so attractive to global investors.

“Lower rates make US debt less compelling—and that weakens demand for the dollar,” he explains. “For investors heavily concentrated in dollar-based holdings, that creates hidden risks.”

Another concern is inflation. While a weaker dollar might boost US exports temporarily, it also raises the cost of imports. For international investors with exposure to US consumption or cost-sensitive sectors, that could introduce margin pressure and reduced profitability.

Time to reassess allocations

Given these dynamics, McLaughlin urges investors to take a proactive approach to currency exposure and diversification.

“This is a wake-up call,” he says. “The global financial system is evolving toward a more balanced currency order. Those who adjust their personal investment strategy now will be better positioned to protect—and grow—their wealth.”

That may include holding a mix of assets across multiple currencies, reviewing cash holdings for currency risk, or consulting with cross-border financial advisers to structure portfolios for maximum flexibility.

“The world is moving away from a one-currency mindset,” McLaughlin adds. “And those who embrace that shift early can take advantage of global pricing trends, emerging markets, and more resilient income strategies.”

The dollar isn’t collapsing—but its grip is loosening. For investors, this is no time for complacency. It’s a time for clarity, action, and smart international positioning.

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You can contact Jake with any questions here: jake.mclaughlin@devere-portugal.pt or the deVere Portugal Office +351 22 110 9071 or book a meeting with him here https://calendly.com/jake-mclaughlin/review