Download PDF
Investment Institute

The shrinking upside in the dollar story

Our research offers three reasons why the dollar’s upside is limited, while the balance of risks increasingly point lower.

5 Sept 2025

19 minutes

Download PDF
Sahil Mahtani

Chapters

01
The fast view
02
Introduction - three reasons behind shrinking upside
03
Reason 1: The US dollar is now extremely expensive
04
Reason 2: Investors unlikely to boost dollar demand
05
Reason 3: Downside risk to the dollar's position in the world
06
Conclusion
01

The fast view

Buildings - City
A quick overview of the key themes in this research, highlighting why the downside risks of owning the dollar now outweigh the potential further gains.

The fast view

  • We recently published research showing that dollar cycles typically last around 18 years, shaped by geopolitics, growth differentials, investment flows, and currency interventions.
  • Our analysis demonstrates these cycles only turn when all four structural forces shift together within a short period.
  • Turning points are rare but developments in 2025 increase the likelihood that one may be approaching.
  • Whether or not 2025 proves to be the turning point, the risk-reward for owning the US dollar is no longer symmetric.
  • Downside outweighs upside – the risks of weaknesses are far stronger than the case for further gains.
  • Three factors underpin this view:
    1. Valuation – starting point remains stretched.
    2. Normalisation of allocation weights – flows into US assets are set to rebalance.
    3. Shifting sentiment – growing willingness among allocators to diversify away from the dollar.

Authored by

Sahil Mahtani
Director: Investment Institute

Sahil is a Director of Ninety One’s Investment Institute. Based in London, he is responsible for...

Explore more insights

Circle texture in concrete
Insights

Insights

Our investment research and insights go together. We tackle the issues that are impacting your investments today — and that could significantly influence investment outcomes in the future.

Read more

Important Information

This communication is provided for general information only should not be construed as advice.

All the information in is believed to be reliable but may be inaccurate or incomplete. The views are those of the contributor at the time of publication and do not necessary reflect those of Ninety One.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon.

All rights reserved. Issued by Ninety One.

Past performance figures shown are not indicative of future performance. Investors are reminded that investment involves risk. Investors should refer to the offering documents for details, including risk factors. This website has not been reviewed by the SFC. 

By clicking on the hyperlink of Investor relations below, you are leaving this website with information specific for retail investors in Hong Kong and entering the global website.

Please note that the global website is not intended to target Hong Kong investors. It has not been reviewed by the Hong Kong Securities and Futures Commission (“SFC”). The website may contain information on funds and other investments products that are not authorised by the SFC and therefore are not available to retail investors in Hong Kong. The website may also contain information on investment services / strategies that are purported to be carried out by a Ninety One group company outside of Hong Kong.

Any product documents and information contained in this website are for reference only and for those persons or entities in any jurisdictions or country where the information and use thereof is not contrary to local law or regulation.

Issuer: Ninety One Hong Kong Limited
Email: [email protected] 
Telephone: (852) 2861 6888 
Fax: (852) 2861 6861