The U.S. dollar is a raging bull in 2025 as the DXY index breached the 110 mark early this year. It is now hovering around the 109.2 range and is gearing up to reclaim its previous high. The USD trounced all leading local currencies to come out on top of the forex markets. The Indian rupee, Chinese yuan, and Japanese yen are falling to new lows against the greenback.

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The rupee dipped to a lifetime low of 86.80 this year, and the currency remains on a slippery slope. Financial analysts predict that the Indian rupee could fall to the 90-92 level in the next six to 10 months. The forecast indicates that the U.S. dollar will only strengthen in 2025 and solidify its place in the currency markets.

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The U.S. Dollar Will Hit Peak in 2025

Trump’s tariff threats could boost the prospects of the U.S. dollar as developing countries cannot abandon the greenback for trade. Chetan Seth, APAC Equity Strategist at Nomura said to CNBC that the U.S. dollar will hit a peak in 2025. He also forecasted that bond yields will soar in value, leading to pessimism in the U.S. markets.

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“Sometime, maybe in Q1 (January-March) or Q2 (April-June), we will reach the stage of peak pessimism, when the market will have much greater clarity on the direction of tariffs. We’ll probably have peak U.S. dollar and bond yields (in 2025). That is when we can be a bit more constructive on Asia,” he said.

Seth explained that Trump imposes tariffs ranging from 10% to 60%, the move could lead to an 80 basis points (bps) rise in U.S. inflation, which in turn could boost the dollar. Developing countries are already gearing up for tariff increases under Trump and positioning their interests accordingly. 2025 could be a game changer for the U.S. dollar as it is safely positioned at the top spot.