The dollar slipped this week, but whether it has been weak this year depends on the money you earn. The same US stock index, the S&P 500, made about 16.0% this year for someone who bought it with euros and about 1.6% for someone who bought it with Korean won. The difference is the dollar.
Why did the dollar fall this week?
Hopes for a deal with Iran sent oil down, and the dollar eased with it: on Monday Brent crude fell about 11%, and the dollar index, which tracks the dollar against six major currencies, ended the week about 0.6% lower. That’s a small move, and the index is still up 3.5% this year.
Is the dollar weak in 2026? Depends on your currency
| If you earn | A dollar this year | What it means |
|---|---|---|
| Euros | Up 5.3% | US trips cost more; US funds gained in euros |
| Yen | Up 0.8% | Barely moved |
| Korean won | Down 7.8% | US goods cheaper; US funds lost value in won |
If you earn dollars, this week’s dip means imports and trips abroad cost a little more, and funds that hold foreign stocks are worth a little more. One week’s move is too small for most people to notice.
The won had a wild year: a dollar cost as much as ₩1,554.48 in June before falling back. I live in Korea, and I think the real story here isn’t a weak dollar but a strong won. In won terms, the euro also got about 12.5% cheaper this year. My guess is that a flood of export dollars is behind it, which has little to do with one day’s oil price.
What does a weaker dollar mean for my funds?
If your US funds aren’t hedged, they can lose value even when US stocks go up.
Here’s a real example. The S&P 500 rose about 10.2% this year in dollars. But if you bought it in your own currency without a currency hedge, your result depends on the exchange rate too:
A hedged fund removes most of that currency effect. Korea has a clean real-world pair: two funds from the same manager that both track the S&P 500, one unhedged and one hedged.
Hedging isn’t free, though. The hedged fund’s 8.3% still fell short of the S&P 500’s 10.2% in dollars, a mix of hedging cost, fees and how its futures are priced. In a year when the won weakens instead, the unhedged fund would come out ahead.
My own funds work this way. I hold two Korean-listed funds that track the Nasdaq-100 and a US dividend index, both unhedged. This year the currency move alone cut about 7.8% from their value in won, about ₩780,000 for every ₩10M I hold.
I don’t hedge, on purpose. Hedging costs roughly the gap between US interest rates and your own country’s each year, and I plan to hold US assets for a long time, so I live with the currency swings either way. Since most of my spending is in won, when I add money I make sure my dollar holdings don’t get too big, especially while the won is strengthening.
What I did when the won was weak
In June, with a dollar near ₩1,560, I needed to buy dollars. I was going to convert the whole amount at once but split it into three batches instead: one in June and two as the won strengthened. The first batch is still underwater; the other two were much cheaper.
With my broker’s discount, each exchange cost me only about 0.05% in fees, so splitting it up cost almost nothing. Since then, I’ve stopped trying to time the currency. I convert fixed amounts at regular intervals.
The one thing to check
Find out whether your foreign funds are hedged. Look for “hedged” or “currency hedged” in the fund’s name or fact sheet. In Korea, hedged funds end in “(H)”; in Japan, look for “為替ヘッジあり”. As the KODEX pair shows, two funds that track the same index can end up far apart in a year like this, just because one is hedged.
Will the dollar be weaker against your currency by year-end?
How each language voted
Resolves: Results shown after you vote, by language · Reader opinions, not investment advice.