Dubai: Investors across the UAE and the broader GCC region must prepare for the possibility of a further weakening US dollar over the next 6 to 12 months. Despite continued gains in US stock markets and the progression of a new federal budget, a softer dollar is emerging as a key concern for both residents and investors.
The recent depreciation of the dollar has already impacted UAE-based expatriates, particularly in terms of remittance values. Now, financial experts are urging investors to re-evaluate their portfolios in light of ongoing currency shifts.
According to a new report by Standard Chartered, the weakening dollar stems from mounting concerns about the US economy’s growing budget deficit and the potential resurgence of inflation. These macroeconomic pressures could weigh down the dollar further.
Investment Strategy Amid Dollar Weakness
“We expect the US dollar to weaken and have accordingly upgraded Asia (excluding Japan) equities and Emerging Market (EM) local-currency bonds to ‘overweight’,” the report stated.
Standard Chartered also maintains a positive outlook on global equities, citing support from strong corporate earnings, easing trade tensions, and manageable inflation levels.
Additionally, the bank notes that China’s economic outlook is stabilizing due to targeted fiscal stimulus and a recovery in retail activity. Meanwhile, India and ASEAN economies are projected to continue their steady growth momentum.
The Case for Gold
Gold remains a preferred safe-haven asset amid currency volatility. Standard Chartered highlights increasing central bank demand for the precious metal and its role as a portfolio diversifier—especially when traditional fixed-income assets offer limited downside protection.
Diversify for Resilience
“Middle East investors have an opportunity to enhance portfolio diversification internationally,” said Ayesha Abbas, Managing Director and Head of Affluent and Wealth Solutions for Europe, the Middle East, and Africa at Standard Chartered.
“Asset classes such as emerging market bonds and non-US equities are well-positioned to help investors manage volatility, generate income, and strengthen overall portfolio resilience in today’s dynamic market environment.”
