Rabobank's Senior FX Strategist Jane Foley highlights that the debate over de-dollarisation gained momentum in April 2025 after the US Dollar and US Treasuries did not experience the traditional safe-haven demand following tariff announcements by US President Trump [1]. Foley notes that there is a clear incentive for several countries and regions to reduce their reliance on the US Dollar payments system, suggesting that the de-dollarisation debate will persist regardless of the outcome of the next US presidential election [1].
However, Foley emphasizes that de-dollarisation is expected to be a gradual process, facing significant resistance from the US Treasury. She argues that, due to the extended timeframes involved, cyclical factors such as interest rate differentials and the resilience of the US macroeconomy will continue to be the primary drivers of US Dollar movements in the near term [1].
Foley also points out that since the onset of the Iran war, interest rate differentials have played a significant role in influencing G10 foreign exchange rates. For example, the British Pound (GBP) was initially supported by increased speculation of central bank rate hikes, although some of this support has since diminished [1].
No specific market reactions or analyst forecasts regarding the immediate direction of the US Dollar are provided, but the article underscores the ongoing importance of cyclical drivers over structural shifts in the short to medium term [1].
CONCLUSION
While the de-dollarisation debate has intensified, Rabobank expects the process to be slow and contested, with cyclical factors like interest rate differentials continuing to drive US Dollar movements in the near term. Market participants should focus on these cyclical dynamics rather than anticipate rapid structural changes.