- The US dollar index (DXY) has dropped over 9% year-to-date, its worst decline in nearly ten years.
- Forex traders are increasing long positions in Asian currencies such as the Singapore dollar, Thai baht, Malaysian ringgit, and Chinese yuan.
- The Malaysian ringgit benefits from fiscal reforms and a strong investment outlook, while the Chinese yuan has seen four consecutive months of gains.
- The Indian rupee is the weakest Asian currency, falling to a record low near 90.47 per US dollar, with ongoing short positions by traders.
The US dollar’s performance has deteriorated sharply in 2025, with the DXY index, which tracks the US dollar against a basket of currencies, falling more than 9% year-to-date. At one point, the dollar dropped nearly 11%, struggling to regain the 100-level mark, signaling sustained weakness. This trend has shifted forex trading preferences toward Asian currencies.
According to data from China/bullish-views-rise-most-asia-currencies-indian-rupee-shorts-spike-2025-12-11/”>Reuters, traders have taken significant long positions in several Asian currencies, including the Singapore dollar, Thai baht, and Malaysian ringgit, reaching levels last seen in mid-June. Lloyd Chan, Senior Currency Analyst at MUFG, noted, “ringgit has found support from fiscal reforms, strong domestic-led investment outlook, and narrowing yield differentials with the US.” This indicates growing confidence in the region amid the US dollar’s decline.
Long bets on the Chinese yuan also increased to the highest level since January 2023. The yuan experienced gains for four consecutive months through November, its longest streak in four years. China recently reported a record trade surplus surpassing $1 trillion, underscoring non-US-driven growth.
Conversely, the Indian rupee remains the weakest performer in Asia so far this year. It hit a lifetime low of approximately 90.47 per US dollar recently, continuing to weaken despite intervention attempts by the Reserve Bank of India (RBI). The rupee’s decline has encouraged traders to short the currency for profit, with some expecting it to fall further, possibly toward 92 per US dollar. More details on the rupee’s fall can be found here.
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