Best & Worst Performing Currencies in 2025

The loonie gained 2.4% against the U.S. dollar in 2025, but percentages don't pay bills. What matters is what you can actually buy with those dollars, and 2025 rewrote the playbook. Here are the key highlights:

1. Loonie hit 1.3573 on June 16, offering 8% savings vs. February's panic
2. 1CAD/INR jumped 6.6% (59.35 to 63.25), delivering ₹3,900 extra per $1,000 sent
3. The U.S. dollar collapsed, with the worst first-half drop since 1973 at 10.7% by mid-year
4. EUR/CAD peaked at 1.6428 in Oct (16-year high), making European travel 11% pricier
5. European currencies soared, with Euro +12%, Swiss franc +12%, Swedish krona +16%

Among currencies, winners reflected policy strength and safe-haven flows. Losers exposed political chaos, hyperinflation, and economic freefall. Venezuela's bolívar collapsed approximately 70%, South Sudan's pound dropped 30-32%, and Turkey's lira fell 17%.

Major Canadian banks project USD/CAD around 1.34-1.36 by year-end 2026 from current 1.40 levels. Trade policy uncertainty around the USMCA review (expected early 2026) could trigger sharp volatility.

— This report provides information only and does not constitute financial or investment advice.

How we measured currency performance?

We tracked movements from January 1 through mid-November 2025 against the U.S. dollar. The greenback holds roughly 58% of global FX reserves and prices nearly all commodities, making it the natural benchmark.

We also tracked CAD against currencies that matter for Canadian money transfers:

• EUR, GBP for travel
• USD for American purchases
• INR, PHP, PKR, MXN for remittances

The other sources we used included central banks (BoC, Fed, ECB, BoJ), Trading Economics databases, Bloomberg indices, major bank research (RBC, J.P. Morgan, Goldman Sachs, MUFG, ING), IMF, and World Bank outlooks.

What happened to global currencies?

Markets experienced their most dramatic realignment in over 50 years. The DXY index dropped 10% by July (worst first-half showing since 1973). Structural shifts accelerated, rewarding safe havens and select emerging markets while punishing high-inflation economies.

Top performing currencies

Here are the best-performing currencies against USD, alongside the key drivers:

Russia's ruble surged 44% against USD to claim the global top spot. The Central Bank's aggressive policy (key rate in the mid-teens to 20% range for much of the year) created an irresistible carry trade appeal. An $18.5 billion trade surplus in early 2025 (up 15% year-over-year) plus warming US-Russia relations under Trump added momentum.

The Japanese yen, which rebounded strongly early in the year after ending negative rates, faded later and ended roughly flat versus the dollar by late November.

Worst-performing currencies

Here is a list of all the currencies that went through a downfall:

Venezuela's bolívar led plummeting approximately 70% from January through September. The official rate surpassed 200 bolívares per USD by October (up from 52 in January).

The IMF projected 254% inflation by year-end (highest globally) with monthly inflation running 20-30% in Caracas. U.S. sanctions limiting oil revenue, political tensions, and abandonment of the fixed peg all contributed.

Why did currencies move so dramatically?

Three forces dominated the year. U.S. dollar structural weakness, severe monetary policy divergence, and global rotation toward high-yielding emerging markets created winners and losers with unusual clarity.

Dollar collapse

The greenback's retreat stemmed from both cyclical and structural factors.. Trump administration tariff policies fundamentally undermined confidence. Independent estimates suggest average applied tariffs jumped to the high-teens or low-twenties percent (steepest levels in many decades). The Tax Foundation calculated that these tariffs effectively acted as a roughly $1,300 per-household tax in 2025.

Fed rate expectations shifted dramatically. Markets priced cuts from 5.25-5.5% to as low as 2.5% by end-2026, while U.S. growth projections slowed to 1.5% in 2025 and 1% in 2026 (down from 2.8% in 2024). Tariffs dampened business investment and consumer spending.

Fiscal concerns added weight. The IMF projected U.S. fiscal deficits in the high single digits as a share of GDP (unusually elevated for a non-recessionary economy). Long-term debt trajectory raised questions about fiscal discipline that traditional dollar bulls couldn't easily dismiss.

Policy divergence

Central bank decisions created massive interest rate differentials that forced currency adjustments. When central banks move in opposite directions, currencies follow with mathematical certainty.

Federal Reserve maintained benchmark at 3.75-4.0% in October 2025. Mandates corresponding adjustments to equalize investor returns (150-175 point gap).

The Bank of Canada from the June 2024 peak to 2.25% by October 29.

The ECB cut rates substantially to 2.00% by October 2025, but markets perceived this as concluding the easing cycle rather than starting an aggressive dovish phase. Stability supported the euro even as rates fell.

EM rotation

Asset managers accelerated their focus on EM currencies. Emerging market local-currency debt gained 15.9% year-to-date through October 2025, according to J.P. Morgan data. Brazil's 15% policy rate and Mexico's gradual cuts (while maintaining attractive yield) exemplified the dynamic. Global capital flowed selectively into alternatives offering either superior carry or robust structural support.

Commodity impact

Oil prices delivered headwinds to commodity currencies throughout the year. WTI averaged around $62/barrel for 2025 according to TD Economics (revised down from $67/bbl in March). The World Bank projected Brent averaging $68 in 2025, falling to $60 in 2026 (a five-year low).

OPEC+ production increases, trade war dampening global demand, and accelerating EV adoption all pressured prices critical to Canada's export-dependent economy. Copper and other industrial metals showed resilience (copper prices were forecast to rally in 2026).

How did the loonie perform?

Your dollar staged a modest recovery that defied some bearish late-2024 forecasts. CAD strengthened 2.4% against USD from 1.4376 at the year start to around 1.4034 by mid-November. Volatility created opportunities and frustrations for anyone managing cross-border finances.

Nick Rees of Monex Canada noted in Morningstar's analysis that "the roughly 5.5% drop in the US dollar against the Canadian dollar is slightly smaller than the former's decline against other G10 currencies, which stands at around 7%-8%." CAD gains reflected USD weakness more than Canadian strength.

European performance

EUR/CAD surged 9.5% — climbing from 1.4881 on January 1 to 1.6288 by mid-November, peaking at 1.6429 on October 16 (a 16-year high). Germany's historic fiscal pivot and ECB policy stabilization drove the move.

BoC cuts

The Bank of Canada slashed rates 225 basis points to 2.25% by October 29. Governor Macklem framed this clearly in the Bank's October statement:

"Monetary policy cannot offset the impacts of a trade war. What it can and must do is ensure that higher prices do not lead to ongoing inflation."

The BoC paused twice (June and July) before resuming cuts in September and October. Markets expect the Bank to hold at current levels through December 2025, with potential for 1-2 additional cuts in 2026 only if core inflation returns decisively to 2%.

Oil price weakness compounded CAD pressures despite improved fundamentals. Canada's production increased approximately 250,000 barrels per day in 2024, with continued growth in 2025, plus the Trans Mountain Pipeline Expansion completion narrowed the WCS-WTI discount to under $10/bbl (versus a historical $15/bbl average). But global price declines overwhelmed these positives.

Economic performance

Statistics Canada reported Q2 brought a 0.4% GDP contraction (first in seven quarters and largest excluding pandemic in nine years). Steep declines in exports and business investment in machinery and equipment reflected direct impacts from tariffs on steel, aluminum, and autos. Budget 2025 revised full-year growth forecasts down from 1.9% to just 1.1%.

Trade tensions

Trump administration policies dominated the narrative. The media labeled April 2 "Liberation Day" when sweeping "reciprocal tariffs" were announced. Canada faced targeted 25% rates in February (though implementation saw suspensions and carve-outs creating whipsaw FX effects).

Steel, aluminum, and auto tariffs were implemented with varying degrees of severity. Energy exports received a partial reprieve (most Canadian oil exports were classified as USMCA-compliant and received exemptions).

By mid-2025, uncertainty eased as Canada became less of a focal point. September brought Canadian retaliation withdrawal (Canada removed "most retaliatory tariffs" on U.S. goods, signaling de-escalation). However, substantial uncertainty remained about the expected early-2026 USMCA review process.

What do currency shifts mean for your wallet?

Abstract percentages matter little until translated into real impact. Whether sending money internationally, booking European trips, or managing USD earnings, currency movements directly affected purchasing power in 2025.

India remittances

Canada-India transfers represented perhaps the year's best opportunity. CAD/INR reached 63.25 in November (up from 59.35 in January) — a 6.6% jump. Every $1,000 sent delivers roughly ₹3,900 extra purchasing power.

The Indian rupee weakened 5% over 12 months against the USD, reaching record lows above 89.5 in November. Combined with CAD's modest USD strength, the cross-rate created optimal conditions. The year's peak rate of 64.21 INR per CAD occurred on August 29.

Provider margins matter enormously:

On 10,000 CAD sent to India, banks deliver ₹605,000-615,000 while competitive providers deliver ₹628,000-632,000. That's ₹27,000 ($425 CAD) lost purely to margin (enough to fund round-trip flights or several months of groceries).

Other key corridors:

• EUR/CAD climbing 9.5% meant purchasing power eroded significantly.
• Canada-Philippines provided a moderate advantage (peso stayed relatively stable)
• MXN jumped ~12% vs. USD, but CAD also gained, resulting in stable CAD/MXN around 13-14)

Travel costs

U.S. destinations saw dramatic cost fluctuations. The best USD conversion window appeared on June 16 when the loonie reached 1.3573 — offering roughly 8% better value versus February 2's worst moment at 1.4715. Anyone exchanging mid-April through end-June enjoyed a favorable 1.36-1.38 range.

By November, USD/CAD settled around 1.40 (near the middle of the year's range), meaning each Canadian dollar buys roughly $0.71 USD. Neither extreme value nor excessive cost for American purchases, road trips, or property deposits.

Europe became notably pricier. EUR/CAD at 1.4742 on January 13 represented the year's best euro-buying opportunity. By October 16, EUR/CAD hit 1.6428 (a 16-year high). Trips to France, Italy, Germany, and Spain cost roughly 11% more by late 2025 versus early 2025.

Emerging market value:

• Brazil improving value (CAD/BRL around 3.8-4.0)
• Mexico reasonable (CAD/MXN stable around 13-14)
• Turkey's excellent value (CAD/TRY above 30 from lira depreciation)
• India's outstanding (CAD/INR at 63-65 delivered the best purchasing power in years

Investment impact

U.S. dollar holdings experienced a 2-3% currency headwind when converting back to CAD. Someone purchasing $10,000 USD in January 2025 at 1.4376 (costing $14,376 CAD) and selling in November at 1.4034 received only $14,034 CAD — a $342 loss purely from FX movement.

However, Morningstar noted that "a stronger Canadian dollar means investors pay less to buy US stocks, providing an attractive opportunity to diversify." The June strength window offered optimal entry timing.

European asset holdings delivered substantial currency gains. EUR appreciation of 9.5% against CAD meant European holdings appreciated significantly in CAD terms beyond underlying asset performance. Someone holding €10,000 worth of European stocks throughout 2025 saw their CAD-denominated value increase roughly $1,000-1,200 purely from currency movement.

Currency movements can dramatically amplify or dampen investment returns. Anyone managing cross-border investments benefits from understanding both asset performance and currency impact.

What should you watch in early 2026?

Forecasting currencies requires humility (unexpected events regularly upend even carefully constructed projections). Examining current trends, central bank guidance, and institutional forecasts provides a framework for thinking about likely scenarios.

Bank forecasts

Major Canadian and international banks point decisively toward continued U.S. dollar weakness, with CAD projected to appreciate modestly to 1.34-1.36 by year-end 2026.

Primary drivers (expected in 2026)

The primary drivers are:

Federal Reserve cuts represent the primary catalyst

Consensus expects 3-4 cuts of 25 basis points through H1 2026, bringing rates from the current 3.75-4.0% toward a neutral terminal rate of 3.00-3.33% by mid-2026. Meanwhile, the Bank of Canada is expected to hold at 2.25-2.50% through 2026.

Narrowing rate differentials reduces the carry advantage of holding USD versus CAD and makes currency hedging less costly for Canadian institutional investors.

Fiscal sustainability concerns weigh heavily on the dollar outlook

The IMF revised U.S. fiscal deficit projections upward to the high single digits as a share of GDP (unusually elevated for a non-recessionary economy). U.S. public debt trajectory raises long-term questions about fiscal discipline.

USMCA renegotiation creates substantial near-term volatility risk

The U.S. Trade Representative must deliver a report on recommendations to Congress by early January 2026, ahead of the July 2026 official review. Multiple analysts identified CAD as having "higher sensitivity — more than any other non-USD G10 currency — to a deteriorating US labour market narrative and oil price weakness in 2026."

Commodity price trajectories matter significantly

The World Bank's October 2025 outlook forecast energy prices falling 12% in 2025 and a further 10% in 2026, with Brent crude potentially reaching $60/barrel (a five-year low). Copper and industrial metals were expected to enter a bull market in H1 2026.

Risk scenarios

Several tail risks could dramatically alter trajectories:

75% of Canadian exports go to the U.S. — any meaningful deterioration could spike USD/CAD back above 1.45-1.50. Greater-than-expected OPEC+ output could push oil below $50/barrel and severely pressure the loonie, while Middle East conflict escalation could spike prices above $90-100/barrel.

China-Taiwan crisis would trigger risk-off flows benefiting USD and JPY while hammering commodity currencies. If U.S. inflation proves stickier than expected, the Fed could pause or reverse cuts (strengthening the dollar contrary to consensus).

How should you position yourself?

Currency movements create concrete financial implications worth acting on. Timing matters when dollars add up.

Large transactions

The roughly 8% swing in USD/CAD from February's worst level (1.4715) to June's best (1.3573) demonstrated how much timing matters. Anyone exchanging $50,000 CAD to USD saved roughly $3,500-4,000 by transacting in June versus February.

Current rates around 1.40 sit near the middle of 2025's range. However, consensus forecasts pointing toward 1.34-1.36 by late 2026 imply waiting could yield 3-4% better rates for USD purchases (roughly $1,500-2,000 saved per $50,000 exchanged).

Set rate alerts at target levels through your financial institution or currency exchange provider. For someone needing USD in the next 12 months with timing flexibility, alerts at 1.37-1.38 might trigger advantageous exchanges if CAD strengthens as forecasted.

Dollar-cost averaging offers an alternative for very large transactions. Rather than converting a lump sum at a single rate, spread the transaction over 3-6 months at regular intervals. You sacrifice potential upside from perfect timing but eliminate catastrophic downside from unlucky timing.

Remittances

Current CAD/INR rates of 63.25 represent premium levels (6.6% above January's 59.35). For regular monthly remittances supporting family in India, maintain a consistent schedule. However, for large one-time transfers like property purchases or education fees, current rates offer compelling value.

If CAD strengthens to consensus 1.34-1.36 USD/CAD by late 2026, and INR stabilizes around 87-88 per USD, CAD/INR could reach 64.5-65.7 by Q4 2026 (another 2-4% improvement). Waiting could yield modest additional benefit, but reversal risk exists.

For remittances to Europe, the current elevated EUR/CAD levels around 1.60-1.63 argue for delaying non-urgent transfers if possible. The 16-year EUR/CAD high suggests a fundamental revaluation occurred rather than a temporary overshoot.

Investments

Someone investing $10,000 CAD into European stocks in January 2025 (receiving roughly €6,720 at 1.4881 EUR/CAD) and holding through November saw their position worth approximately $10,950 CAD purely from EUR appreciation to 1.6288 (a 9.5% currency gain before considering underlying stock performance).

Diversify across currencies. Canada's economy remains heavily dependent on energy exports and U.S. trade (vulnerabilities the year's volatility highlighted painfully). Holding some combination of USD, EUR, and select EM currencies through foreign investments or multi-currency accounts provides natural hedging against potential CAD weakness episodes.

For anyone planning significant European travel or property purchases in 2026, consider converting some portion of anticipated expenses now (despite elevated EUR/CAD levels). Forecasts suggest further euro strength is possible as German fiscal stimulus materializes and ECB policy remains stable. Locking in 1.60-1.63 rates might prove wise if EUR/CAD climbs toward 1.65-1.68.

The bottom line

Currency markets in 2025 delivered a clear message about structural evolution. The greenback's worst first-half performance in over 50 years reflected deeper shifts (fiscal concerns, policy unpredictability, and deliberate central bank diversification away from dollar reserves) rather than temporary disruption.

For Canadians, the split performance will likely persist through 2026. Your loonie gains versus USD but loses versus EUR and GBP because fundamental drivers remain unchanged.

Monitor three key indicators through Q1 2026:

• Bank of Canada policy announcements (next decision December 11, 2025)
• Federal Reserve meetings (January 28-29, 2026 provide critical guidance)
• USMCA report to Congress developments (expected early 2026)

Consensus forecasts point toward continued modest CAD appreciation against USD, but substantial uncertainty remains. Staying informed, maintaining flexibility, and implementing risk management strategies serve you better than attempting to time dramatic moves.

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