The quickly shifting US trade policy has unsettled markets and raised expectations for rate reduction by the Federal Reserve, which has caused outflows from the largest economy in the world and sent the currency to its lowest level in three years. Despite Friday’s gains due to safe-haven flows following Israel’s assault on Iran, the dollar was still on track for its worst weekly decline in a month.
Additionally, it has lost about 10% vs a basket of major currencies this year, forcing other nations to deal with unforeseen foreign exchange movements that are affecting inflation and economic development.
Here are a few of the major influencers: 1. CROWN JEWELS The currencies of Scandinavia have performed the best against the US dollar thus far in 2025. With a 15% increase, the Swedish crown is performing better versus the US dollar this early in the year than it has in at least 50 years. With a 13% increase, Norway’s crown is having its best run since 2008. The fact that Sweden’s crown is up just 4.5% versus the euro and Norway’s is up just 2% makes it clear how much of this strength is due to dollar weakening.
Although its economy and inflation are slowing, Sweden anticipates lowering interest rates this month, and its currency is not showing any indications of depreciation. Lower oil prices tend to cool the crown in Norway.
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