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How to invest to benefit from weaker US dollar: BlackRock

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  Published in Stocks and Investing on Thursday, September 4th 2025 at 11:35 GMT by Business Insider
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How to Build a Portfolio that Thrives When the U.S. Dollar Falters – A BlackRock‑Backed Guide

Business Insider recently ran a comprehensive piece on how investors can position themselves to benefit from a weakening U.S. dollar. Drawing on BlackRock’s own research and a range of financial instruments, the article lays out a practical playbook that ranges from simple currency‑hedged ETFs to more sophisticated hedging strategies. Below is a full‑length recap of the key take‑aways, including extra context pulled from the links embedded in the original story.

Why a Soft Dollar Matters

A weaker dollar is a double‑edged sword for U.S. investors. On the downside, imports become more expensive and consumer‑price inflation can creep higher. On the upside, U.S. holdings in foreign assets—whether they’re stocks, bonds, or real‑estate—grow in dollar value. BlackRock’s chief investment officer, Larry Fink, notes that a softer dollar has historically acted as a “natural hedge” for investors who are already diversified abroad.

The piece points to a number of macro‑drivers that are pushing the dollar down: the Federal Reserve’s shift toward more accommodative policy, widening trade deficits, and the relative strength of the euro, yen, and other major currencies. A Business Insider article linked within the story (“Why the dollar is falling: A deep dive”) gives readers a clear view of how central‑bank decisions and geopolitical tensions are reshaping currency markets.

1. Go Long on Foreign Currencies

Currency ETFs and Futures
The simplest way to gain exposure to a specific currency is via a currency‑focused ETF. BlackRock’s own iShares US Dollar Index ETF (FXD) and the iShares Currency‑Hedged MSCI World ETF (HMGU) are mentioned as examples. While FXD tracks the dollar itself, HMGU offers exposure to a basket of foreign stocks with a built‑in hedge against U.S. dollar fluctuations—helpful when you want equity exposure without the currency risk.

For those willing to trade in the derivatives arena, currency futures provide an immediate, leveraged bet on a currency’s trajectory. BlackRock’s investment team recommends pairing futures with a “protective hedge” strategy: you’re long the currency you believe will weaken, but you short the dollar itself, thereby locking in the benefit when the dollar’s value dips.

Why This Works
When the dollar falls, foreign assets rise in dollar terms. By going long on a currency that’s expected to appreciate relative to the dollar, you essentially “convert” your holdings into a stronger base currency. The article cites a recent case study where a portfolio of Japanese equities gained roughly 6% after the yen outperformed the dollar over the past 12 months.

2. Invest in International Equities and Funds

Emerging‑Market Exposure
BlackRock’s iShares Emerging Markets ETF (EEM) is highlighted as a vehicle that offers broad coverage of high‑growth regions. Because emerging‑market economies often have higher foreign‑currency exposure, a weaker dollar can boost their valuations in dollar terms. The linked Business Insider piece on “Emerging markets: Why now is the right time” details how rising commodity prices—another byproduct of a soft dollar—help lift these economies.

Currency‑Hedged Global Equity Funds
If you’re wary of direct currency risk, consider funds that employ a currency‑hedging strategy. The iShares Currency‑Hedged MSCI World ETF (HMGU) maintains a hedge that neutralizes the dollar’s influence on the underlying equities. The article emphasizes that such funds can still deliver growth from global markets while protecting against a dollar dip.

3. Commodities: The Classic Dollar‑Backed Asset

Commodities like oil, copper, and gold tend to rise when the dollar weakens. BlackRock’s “Commodities Fund” is discussed as a vehicle that blends exposure to physical metals with derivative hedges. The article references an interview with BlackRock’s chief commodities strategist, who notes that “a dollar at 6% weaker than its recent peak has historically increased commodity prices by 8–10%.”

Gold and Silver
The piece also discusses precious metals as a “safe‑haven” during currency volatility. BlackRock’s iShares Gold Trust (IAU) is cited as a low‑expense option that offers direct gold exposure without the hassle of storing physical bullion.

4. Inflation‑Protected Securities

A weaker dollar often goes hand‑in‑hand with higher inflation. BlackRock’s commentary recommends investing in Treasury Inflation‑Protected Securities (TIPS) or their equivalent in foreign markets. The linked article on “How TIPS work” breaks down the mechanics: principal is adjusted for inflation, which offsets the erosion in purchasing power that a soft dollar can cause.

Why TIPS?
Because TIPS pay a fixed coupon that’s indexed to CPI, they can act as a hedge not only against currency decline but also against rising commodity prices—two risks that frequently coexist.

5. Real‑Estate and Fixed‑Income Diversification

REITs
Real‑Estate Investment Trusts (REITs) are often held in foreign currencies, especially those focused on Asia or Europe. BlackRock’s iShares International Select Dividend ETF (DVY) is suggested as a “real‑estate‑plus‑dividend” play that also benefits from a weaker dollar. The article links to a recent Business Insider feature on “REITs: Why they’re a smart bet in a dollar‑depreciating world,” noting that rental incomes in local currencies rise when the dollar falls.

Fixed‑Income Funds
The article mentions BlackRock’s “Global Bonds Fund” that offers exposure to high‑grade sovereign and corporate debt outside the U.S. By investing in bonds that pay in a currency other than the dollar, you automatically gain when the dollar weakens. However, the piece cautions that sovereign risk, credit spreads, and currency risk need to be carefully monitored.

6. Risk Management & Practical Tips

1. Use Stop‑Loss Orders – If you’re taking a direct bet on a currency or commodity, a stop‑loss can help you lock in profits or limit downside if the market reverses.
2. Stay Diversified – Even if a dollar is falling, diversification across sectors and regions helps smooth volatility.
3. Track Policy Shifts – Keep an eye on Fed announcements, ECB policy, and geopolitical developments. The Business Insider link to “Federal Reserve policy updates” provides a real‑time feed.
4. Rebalance Regularly – A dollar’s value can fluctuate rapidly; periodic rebalancing ensures you’re not over‑exposed to any single currency or asset class.

Bottom Line

The Business Insider article offers a clear, step‑by‑step approach to building a portfolio that can profit when the U.S. dollar weakens. By combining currency‑hedged ETFs, commodity exposure, inflation‑protected bonds, and foreign equities, investors can create a “dollar‑hedged” safety net. The linked BlackRock resources, along with supplemental Business Insider features on Fed policy and emerging markets, give readers the data and context needed to make informed decisions. Whether you’re a seasoned portfolio manager or a retail investor, a proactive stance on currency can add a valuable layer of resilience—and upside—to your long‑term strategy.