NEW DELHI– The global currency landscape is undergoing a significant transformation as the dominance of the U.S. dollar weakens under sustained pressure from interest rate uncertainties and potential new trade tariffs, according to a new report by Emkay Wealth Management.
The report highlights that while the U.S. Federal Reserve remains cautious and non-committal on future rate moves, global markets are beginning to shift their focus elsewhere. “One thing is becoming increasingly apparent: the dollar may no longer be the sole anchor in the global currency narrative of 2025,” the report stated.
In contrast, the euro and British pound have gained ground, bolstered by proactive rate cuts from the European Central Bank (ECB) and the Bank of England (BOE), alongside growing investor confidence in the EU’s economic recovery and increased defense spending—announced at the Munich Summit to rise from 2% to 6% of GDP.
In Asia, the Indian rupee has demonstrated short-term strength, rebounding from a recent high of ₹87 to the dollar. This recovery, the report notes, is supported by improved trade figures and expectations of renewed foreign capital inflows once U.S. interest rates begin to ease.
“The real momentum in currency markets is shifting outside the U.S., driven by strong policy responses and improving macroeconomic fundamentals across regions,” the report said.
However, continued uncertainty around U.S. inflation and the Biden administration’s evolving tariff stance—exacerbated by Donald Trump’s return to office and his reciprocal trade policies—has kept the dollar under pressure. Despite rising U.S. interest rates in recent months, the greenback has been on a steady decline.
Until the Federal Reserve offers more clarity on its policy direction, particularly regarding inflation and tariffs, analysts expect this trend to persist. In the meantime, global currencies are increasingly finding support through regional economic resilience, signaling a more multipolar monetary environment ahead. (Source: IANS)
