Preparing for a Devalued Dollar

Standard Chartered Bank’s market outlook for the second half of 2025 is positive yet volatile. The bank foresees a weakening US dollar, global policy easing, and a probable soft landing for the US economy. Historically, a weaker US dollar has favored global equities, especially assets outside the US. Therefore, the bank has upgraded its stance on Asia ex-Japan equities to “Overweight,” reflecting optimism about the region’s growth trajectory. Additionally, Standard Chartered recommends 5-7 year maturities in US dollar bonds and has shifted EM local currency bonds to an “Overweight” position, citing their potential to benefit from a depreciating dollar and expected rate cuts by EM central banks.

The bank’s market report stresses that global equities thrive under a backdrop of worldwide policy ease, a potential US soft landing, and a diminished US dollar. They advocate for diversified global equity exposure to navigate ongoing market volatility. Despite significant fluctuations in the markets during Q2 2025 due to events like the transition of Nifty contracts to SGX GIFT City and persistent Middle East tensions, global equities have posted an approximate 8% gain quarter-to-date.

Looking forward to the second half of 2025, Standard Chartered remains optimistic about economic and earnings growth. While early US survey data was soft, robust “hard data” indicates economic resilience, reinforcing the bank’s soft landing scenario outlook. This belief is further supported by accommodative fiscal and monetary policies in the US, Europe, and Asia.

Despite favorable conditions, the bank advises investors to remain cautious due to specific risks in the investment landscape. Of particular concern is the conclusion of President Trump’s 90-day tariff pause in early July, anticipated with possible extensions and heightened trade discussions. Ongoing geopolitical tensions in the Middle East and between Ukraine and Russia add complexity, potentially causing temporary spikes in energy prices. However, Standard Chartered believes these risks may lead to brief, rather than prolonged, market volatility.

To minimize risks and navigate temporary market turbulence, Standard Chartered proposes Gold and Alternative Strategies as viable options for diversifying investment portfolios. As investors position themselves for a potentially weak US dollar and global policy ease, the bank encourages prudent asset allocation strategies.