The greenback wavers, investors adapt. Daniel Varela, CIO of Piguet Galland, shares his view on the deep-rooted dynamics reshaping the global monetary balance.
In recent months, the US dollar has experienced a marked depreciation. While this may offer short-term benefits for US industrial ambitions, it also reflects much deeper structural tensions. Daniel Varela, Chief Investment Officer at Piguet Galland, shared his analysis in a recent feature in Le Temps.
The trade policies pursued by the Trump administration are raising increasing concerns among institutional investors—particularly central banks, which hold substantial foreign exchange reserves in dollars. This uncertainty is prompting them to accelerate their diversification strategies by reducing dollar exposure and strengthening their hedging mechanisms.
As Daniel Varela points out, this trend is not new. “Back in 2022, the freezing of Russian reserves following the invasion of Ukraine encouraged countries like China and India to reduce their dollar holdings. But by April 2025, the movement had intensified.”
Historically, the dollar has gone through several periods of weakness—notably after the dot-com bubble and the 2008 financial crisis. But this time, the decline appears to be driven by structural factors. Beyond a slowdown in the US economy, several elements are at play: inflation higher than in other developed countries, a twin deficit—fiscal and trade—and a reassessment of long-standing monetary correlations.
“The interest rate differential between the US and Europe no longer favours the dollar as it once did,” explains Daniel Varela. This calls into question a mechanism that has long enabled the US to attract foreign capital.
While a weak dollar supports US exports and reindustrialisation efforts, it presents challenges for its trading partners. European firms—and Swiss ones in particular—face dual pressures: rising relative prices of their goods in the US and import tariffs, which are difficult to pass on to end consumers.
In the medium term, this could shift global value chains, with some companies encouraged to relocate part of their production to the United States.
Read the full article in Le Temps (French only)