The U.S. dollar is marching ahead in the forex markets by trouncing leading local currencies in the charts in 2025. The DXY index, which tracks the performance of the USD against a basket of currencies shows it hitting the 108.4 mark. It is expected to reach a high of 109 this month as Trump takes office on January 20, 2025. Trump made it clear to protect the greenback and make its reign stay longer in the global currency markets.
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Local Currencies Fall Against a Stronger U.S. Dollar
Leading local currencies like the Indian rupee, Chinese yuan, and the Japanese yen plummeted against the U.S. dollar at the opening of 2025. The Indian rupee fell to an all-time low of 85.79 and is projected to dip further on the heels of Trump’s inauguration. Estimates indicate the rupee could dip to as low as 86 and remain weak against the onslaught of the USD.
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In addition, the Chinese yuan has fallen to a two-year low against the U.S. dollar. The weak Purchasing Managers’ Index data (PMI) is pulling the yuan down in the indices. Regional investors are bearing the brunt of the declining economy when the Communist country is dolling out stimulus measures. The U.S. dollar is benefitting from the global cues that affect the Asian forex markets. Local currencies are at their lowest point and 2025 will be challenging to their growth prospects.
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The development puts the U.S. dollar on the front foot against the challenges thrown by other leading local currencies. The greenback is making a comeback as forex investors are taking long positions on its prospects. Institutional investors have exited from emerging economies and poured their funds into the American markets. The move stems from the belief that Trump could boost the economy leading to the markets entering the bullish phase.