UBS: Investors should consider the excessive exposure to the US dollar in their investment portfolios.

date
05/08/2025
The office of the chief investment officer of UBS Wealth Management stated that a public opinion survey shows significant concerns among economists and market participants about the independence of the Federal Reserve and the accuracy of US economic data. The recent dismissal of the director of the US Bureau of Labor Statistics and the unexpected resignation of a member of the Federal Reserve Board could exacerbate these concerns. The market focus is now shifting back to how the Federal Reserve will respond to weakening growth momentum, which could also lead to increased scrutiny of US policy formulation and more intense fluctuations in US Treasury yields. "Investors should consider reducing excessive exposure to the US dollar in their portfolios." UBS believes that the current high levels of the US dollar and stock prices present a good opportunity for action. In the Asia-Pacific region, the Australian dollar, Chinese yuan, and Singapore dollar are good tools for diversifying excessive US dollar exposure. Investors looking to diversify excessive US dollar exposure may consider the lower volatility of the Chinese yuan. The outflow of Chinese services, investments, and offshore assets has eased, and foreign capital flows have become more stable. Given the weakening confidence in the US dollar among investors, Chinese policymakers seem to welcome a strengthening yuan, which could further promote the internationalization of the Chinese yuan.