There are many factors that can affect the value of a dollar, but why does the dollar often fall when the Fed lowers interest rates? 💵⬇️ A “weaker dollar” doesn’t mean your money disappears, it means the U.S. dollar buys less compared to other currencies around the world. When interest rates are high, global investors want U.S. dollars because they can earn higher returns in U.S. bank accounts and with Treasury bonds and other US assets. That demand pushes the dollar up. When rates are lowered, those returns look less attractive. Investors move money elsewhere, sell dollars, and demand drops, which can weaken the currency. This matters for things like: • international travel • imported goods • global investing • inflation trends Understanding how interest rates affect the dollar helps you better understand what’s happening in the economy and why markets react the way they do.