According to a UBS report, the US dollar index (DXY) fell to a three-year low in June. The dip came amid rising uncertainty over US tariffs and economic policies. The DXY has fallen 10% in 2025 as of June 16. According to the UBS CIO, it may be time to reduce and hedge US dollar exposure before the currency falls further. The developments have further fuelled the de-dollarization sentiment.
De-Dollarization Taking Further Hold
The dip in the US dollar’s dominance has put a serious question mark on the greenback. According to UBS, harsher-than-expected US tariffs have deteriorated “investor perceptions of US exceptionalism.“
UBS also sees substantial challenges to the US dollar’s role as a “safe-haven.” To make matters worse, the bank does not see the dollar recovering anytime soon. The report states, “We believe any near-term dollar bounce is unlikely to be sustained.“
The report further notes that previously, the US government was spending significantly even during high-interest rate periods of restrictive monetary policies. UBS does not expect US government spending to expand as needed. Additionally, the bank is not of the opinion that the Federal Reserve will keep interest rates high. The ongoing trade wars further diminish the US dollar’s position. All factors make the dollar “unattractive” in the bank’s eyes.
Also Read: Gold, Yuan, Euro Rise as De-Dollarization Redraws the Map
UBS’s report further highlights the problems with the US dollar. Add to this the growing sentiment among nations to use local currencies for mutual trade, and we get another de-dollarization recipe.
UBS is one of many institutions that have expressed their worries about the greenback. In a letter to shareholders, BlackRock CEO Larry Fink also put forward a similar sentiment. Fink said that the US dollar’s position as the global reserve will not remain forever. Fink believes other digital currencies, like Bitcoin (BTC), could take the top spot in the future.
