US Dollar: Cyclical drivers and de-dollarisation – Rabobank

Rabobank's Senior FX Strategist Jane Foley examines structural de-dollarisation themes alongside near-term Dollar dynamics. The de-dollarisation debate intensified after tariffs failed to trigger a traditional safe-haven bid for the Dollar and Treasuries in April 2025. Foley argues this shift will be slow and contested by US authorities, so cyclical factors like interest rate differentials and US macro resilience will continue to drive Dollar moves.

Slow de-dollarisation versus near-term support

"The debate about de-dollarisation lurched into the limelight in April 2025 after both the USD and US treasuries simultaneously failed to catch a safe haven bid following the tariff announcements from US President Trump. There is a clear incentive for several countries/regions to move away from reliance on the USD payments system meaning that the de-dollarisation debate is here to stay. This is likely to be the case almost irrespective of who wins the next US presidential election."

"That said, de-dollarisation is set to be a slow process which will meet plenty of opposition from the US Treasury. Given the time frames involved, we would argue that cyclical drivers will still move the USD in both directions."

"Since the start of the Iran war, interest rate differentials have had a significant impact on G10 FX rates. Currencies such as GBP were buoyed early on in the conflict on the back of a surge in central bank rate hike speculation. Some of this has subsequently been unwound."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)