DBS Group Research highlights that its FX risk score has fallen to the lowest level since late 2021, driven mainly by a weaker US Dollar in early 2026 after a 9.4% depreciation in 2025. Economists Chua Han Teng and Daisy Sharma note that concerns over US Fed independence, US exceptionalism and fiscal sustainability continue to weigh on the Dollar.
FX risk score falls on softer Dollar
“This week’s featured insight is our Asset Risks Dashboard, which track conditions and gauge risk sentiments across four key asset classes (Equities, Interest Rates, Credit, and FX). Today we focus on FX.”
“The FX risk score has trended lower in early 2026 to its lowest level since late 2021.”
“The increasingly benign level primarily reflects a weaker US dollar at the start of this year, having already depreciated by 9.4% in 2025.”
“This continues to be due to worries surrounding the US Fed’s independence (despite the announcement of Kevin Warsh as the new Fed Chair), investor concerns regarding US exceptionalism, long-term fiscal sustainability, and ongoing policy uncertainties.”
“US funding conditions remain comfortable in the Euro and Japanese markets, although with slight tightening bias.”
