Major currencies strengthen against US dollar despite tariffs

Since the start of 2025, most major currencies have risen against the US dollar. This is despite a significant increase in US tariffs, according to Fitch Ratings' new FX Market Monitor.

Developed market currencies, except for Australia, have gained an average of 4.5% since late 2024. Concerns about tariff impacts on US growth seem to affect the dollar's value more than a narrower trade deficit.

Emerging market currencies show varied movements. The Russian rouble has appreciated by about 30%. The Brazilian real and Polish zloty also strengthened, while the Turkish lira and Indonesian rupiah weakened. Since January 2023, the yen has dropped by 12% against the dollar. In contrast, the euro and Swiss franc have increased by 2.7% and 7%, respectively.

In emerging markets, the number of Turkish lira per dollar has roughly doubled. The Korean won and Indonesian rupiah have depreciated by 15% and 7.5%, respectively. Nominal effective exchange rates (NEER) reflect averages of bilateral rates based on trade patterns.

Despite recent weakness, the US dollar NEER remains near a multi-decade high. It steadily appreciated from 2015 to 2024. Switzerland’s NEER is close to an all-time high as well. However, the euro NEER has slightly decreased from its record high in summer 2024.

The NEERs for Japan and the UK are significantly lower than in 2000—by 26.5% and 15.8%, respectively. Only China and Poland among Fitch's emerging market economies have seen their NEER appreciate since 2000.