Why Measuring Assets in Dollars Misses the Entire Move

The U.S. dollar has long served as the global benchmark for asset valuation, a legacy rooted in its role as the world's primary reserve currency and safe-haven asset. However, the past decade has seen this paradigm begin to erode. From 2014 to 2024, the dollar enjoyed a period of "exceptionalism," driven by robust returns on U.S. assets and its entrenched dominance in global finance. Yet, by 2025, structural pressures and shifting investor priorities have exposed the limitations of a dollar-centric valuation framework. As global capital increasingly diversifies into non-dollar assets, the traditional reliance on the U.S. dollar as a proxy for value is no longer sufficient to capture the full scope of market dynamics.

Structural Pressures on the U.S. Dollar

The dollar's recent weakness is not a temporary anomaly but a symptom of deeper structural shifts. Rising U.S. debt levels, coupled with a Moody's downgrade of U.S. sovereign debt, have eroded confidence in the currency's long-term stability. According to a report by RBC Wealth Management, the U.S. Dollar Index (DXY) fell nearly 10% in the first half of 2025-the worst performance for this period in over 50 years. While the dollar remains overvalued relative to most major currencies, its relative strength has diminished as investors hedge against U.S. fiscal vulnerabilities and seek alternatives.

This shift is further amplified by the emergence of competitive non-U.S. investment opportunities. Europe's improving economic outlook, China's advancements in AI, and the growing appeal of emerging markets have drawn capital away from dollar-denominated assets. For instance, the MSCI World ex US Index outperformed the S&P 500 in 2025, delivering a 19.5% total return in the first half of the year alone. This outperformance was driven not only by stronger fundamentals in non-U.S. markets but also by currency appreciation, as a weaker dollar made foreign equities more attractive to U.S. investors.

The Flawed Logic of Dollar-Based Valuation

Measuring assets solely in dollars overlooks the compounding effects of currency dynamics and global diversification. A weaker dollar inherently boosts the returns of international equities when converted into U.S. currency, creating a tailwind for investors who rebalance their portfolios geographically. For example, developed-market equities in Europe and Asia Pacific ex-Japan surged in December 2025, with the MSCI World ex US Index rising 3.0% as local currencies appreciated against the dollar.

Moreover, traditional diversification strategies-such as the negative correlation between stocks and bonds- have weakened due to persistent inflation and policy shifts. This has forced investors to seek uncorrelated returns through alternatives like commodities, digital assets, and semi-liquid products. The convergence of public and private markets has further blurred the lines between asset classes, with innovations like public–private model portfolios unlocking new capital flows. These trends underscore the inadequacy of a dollar-centric lens in capturing the full spectrum of risk and return.

The Path Forward: A Global Perspective

The implications for investors are clear: a narrow focus on dollar-based valuation risks missing the broader move toward global diversification. As BlackRock's 2025 Fall Investment Directions report notes, the integration of private markets into wealth management and insurance channels is expected to unlock $6 trillion to $10.5 trillion in capital over the next five years. This shift reflects a structural reorientation of global capital flows, where liquidity, geographic exposure, and currency diversification take precedence over traditional benchmarks.

For U.S. investors, the dollar's cyclical weakness has turned a historical headwind into a tailwind. International equities, once discounted due to currency headwinds, now offer compelling value propositions. Multinational corporations, particularly in export-dependent sectors, have also benefited from the dollar's decline, as foreign buyers gain purchasing power. These dynamics highlight the need for a more nuanced approach to asset valuation-one that accounts for currency movements, regional economic cycles, and the evolving role of non-traditional assets.

Conclusion

The U.S. dollar's declining dominance is not a sudden collapse but a gradual recalibration of global capital flows. While the dollar's structural advantages-such as its reserve currency status-remain intact, the convergence of fiscal imbalances, shifting investor preferences, and technological innovation is reshaping the landscape. Measuring assets in dollars alone risks obscuring the true drivers of value in a world where diversification is no longer optional but essential. For investors, the lesson is clear: the future of asset valuation lies in embracing a global, multi-currency perspective that transcends the limitations of a single benchmark.