UBS suggests reallocating funds into assets like the euro, Swiss franc, yen, gold, or even emerging market currencies, depending on individual risk appetite.
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The global investors holding too much cash in US dollars may face increasing risks, and it might be the right time to consider shifting some of that money into other currencies or assets, according to a report by UBS.
The report stated that the US dollar had been a popular choice in the past few years due to strong US economic growth, high interest rates, and strong performance of US stock markets. However, things are changing now.
The report believed the US dollar may lose some of its strength because of new market conditions, such as slowing growth in the US, changes in interest rate expectations, and global shifts in capital flows.
It said “Given recent market developments, we believe it is timely to assess whether current US dollar allocations are above long-term targets, and to consider the potential benefits and risks of increasing exposure to home or alternative currencies”.
The report also added if the dollar weakens, holding too much cash in it could reduce the value of investments, especially for people who have expenses in other currencies.
The report suggested that investors should review their financial needs and future expenses and then decide how much of their portfolio should stay in US dollars.
If they have to pay for things like tuition fees, property, or business costs in another currency, it may be smart to hold more money in that currency instead of converting it later when the dollar might be weaker.
The report said “Matching assets to future liabilities is one approach to managing risk and may help avoid conversions at less favorable exchange rates”.
UBS also offered ideas for where excess dollar cash could be moved. The euro is one of the safest and most flexible options. For those looking for stability, the Swiss franc and Japanese yen are considered safe but offer very low returns.
For higher returns, investors might look at currencies like the Australian dollar or emerging market currencies such as the Brazilian real or Mexican peso, though these come with more risk. Gold is also recommended as a long-term safe option, especially during uncertain times.
In summary, UBS says investors should act now, check their US dollar exposure, and think about shifting to other currencies or assets. This way, they can protect their money from possible losses if the dollar gets weaker in the future.
Published on June 4, 2025
