US Dollar Strengthens, Investors Eye Alternative Currencies

Recent Dollar Index Performance

The US Dollar Index (DXY) has demonstrated a notable strengthening trend recently. While it corrected slightly by 0.05% to 100.112 on Friday, November 21, 2025, the index has shown a 1.19% increase over the past month. This recent performance brought the index to a five-month high of 100.228 on Wednesday, November 19, 2025.

Factors Driving Dollar Strength

The primary driver behind the dollar's strengthening is the evolving outlook on The Federal Reserve's monetary policy. Despite speculation about potential rate cuts, robust US labor market data has countered these expectations. Comments from Fed officials indicating that inflation remains above target have reinforced the view that interest rates will remain high for an extended period. The Federal Open Market Committee (FOMC) minutes further supported this perspective, revealing a divided stance among Fed officials on monetary policy.

Impact on Investor Preferences

Sutopo Widodo, President Commissioner of HFX International Berjangka, noted that the higher US interest rates have enhanced the appeal of US Treasury yields and the US dollar. This development has made alternative currencies more attractive to investors seeking diversification. As global investors navigate these currency dynamics, certain foreign currencies are emerging as viable alternatives in the current market environment.