US dollar can weaken further - what must UAE, Middle East investors do?

Asian markets offer options for if dollar weakness persists, says Standard Chartered

Last updated:
Manoj Nair, Business Editor
2 MIN READ
The dollar's been having a sharp drop off in recent days. It's hurt UAE based remitters - and it's also time for investors to take a closer look.
The dollar's been having a sharp drop off in recent days. It's hurt UAE based remitters - and it's also time for investors to take a closer look.
Bloomberg

Dubai: UAE and GCC investors will need to factor in a weak dollar – and which could drop further in the next 6-12 months – into their calculations. This is the case even with the US stock markets continuing to push higher as a new budget goes through the approval process.

The weakening dollar has been in the limelight again in recent days, with many UAE based expats finding the downside at the time of remittances.

Investors too need to account for the dollar losing more of its edge against other currencies, according to a new report by Standard Chartered. The dollar weakness has all to do with concerns over that economy’s growing budget deficit and the possibility of a return to higher inflation.

What should investors do?

“We expect the US dollar to weaken and have accordingly upgraded Asia (ex-Japan) equities and Emerging Market (EM) local-currency bonds to overweight,” says the Standard Chartered report.

“Global equities also remain an ‘overweight’ position across portfolios, supported by healthy earnings, easing trade tensions, and controlled inflation (so far).”

According to the Standard Chartered report, "China’s outlook is stabilising on the back of targeted stimulus and improving retail activity. Growth in India and ASEAN is expected to remain well-supported."

More gold?

Gold is the other obvious investment choice - and the asset has already seen 'strong central bank demand' and in its 'role as a diversifier when bonds offer less downside protection'.  

Diversify where possible

"Investors in the Middle East have an opportunity to reposition portfolios with greater international diversification," said Ayesha Abbas, Managing Director and Head of Affluent and Wealth Solutions, Europe, Middle East and Africa, and UAE at Standard Chartered.

"Asset classes such as Emerging Market bonds and equities across major regions (including non-US equities) are well-placed to help investors navigate volatility, capture income, and enhance portfolio resilience in today’s shifting landscape.”

Manoj Nair
Manoj NairBusiness Editor
Manoj Nair, the Gulf News Business Editor, is an expert on property and gold in the UAE and wider region, and these days he is also keeping an eye on stocks as well. Manoj cares a lot for luxury brands and what make them tick, as well as keep close watch on whatever changes the retail industry goes through, whether on the grand scale or incremental. He’s been with Gulf News for 30 years, having started as a Business Reporter. When not into financial journalism, Manoj prefers to see as much of 1950s-1980s Bollywood movies. He reckons the combo is as exciting as it gets, though many will vehemently disagree.
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