The US dollar held steady on Wednesday but was positioned for its biggest annual decline since 2017, as Federal Reserve rate cuts, fiscal concerns, and policy uncertainties under President Donald Trump cast a shadow over currency markets throughout 2025.

The dollar's weakness has enabled major currencies including the euro and sterling to post their strongest performances in eight years, with many analysts expecting this trend to continue into 2026 amid ongoing concerns about Fed independence and erratic trade policies.

Annual Currency Performance Overview

The following table highlights the dramatic shifts in major currency pairs during 2025:

Trump Administration Adds Uncertainty

Adding to the dollar's challenges, concerns about Federal Reserve independence under the Trump administration remain prominent. Trump announced plans to reveal his Fed chair pick in January, replacing Jerome Powell whose term ends in May and who has faced consistent criticism from the president.

This backdrop has maintained the "sell-dollar" trade firmly in place, with positioning remaining net-short since April according to Commodity Futures Trading Commission data. The bearish dollar sentiment extends into 2026, with TD Securities' Prashant Newnaha noting that short dollar positions versus EUR and AUD are expected to perform well.

Fed Policy Divisions and Market Expectations

The dollar received modest support after Fed December meeting minutes revealed deep divisions among policymakers following their recent rate cut. While traders are pricing in two cuts for 2026, the central bank itself has projected just one additional reduction next year.

Goldman Sachs strategists anticipate dollar weakness continuing next year against solid global growth and Fed rate cuts while other central banks remain on hold. However, they noted the move would likely be "much shallower" unless concerns about labor market recession or deeper cuts materialize.

Japanese Yen Remains Fragile Despite BOJ Tightening

The Japanese yen stands as a notable outlier, remaining broadly flat for 2025 despite the Bank of Japan raising rates twice during the period. The yen traded at 156.35 per dollar, gradually moving away from levels that previously triggered intervention concerns from Tokyo officials.

Investors expressed disappointment with the slow monetary tightening pace, with significant long yen positions from April completely reversing by year-end. MUFG strategists forecast conditions for dollar-yen retracement should materialize in 2026, projecting the yen to reach 146 per dollar by Q4 2026 as lower US yields could revive the yen's safe-haven status.

Emerging Markets and Commodity Currencies Benefit

The dollar's weakness has propelled emerging markets and commodity currencies to strong annual gains. China's yuan broke through the psychological level of seven to the dollar for the first time in 2.5 years, positioning for a 4% annual increase.

The Australian dollar maintained its momentum near $0.66965, set for over 8% annual surge representing its best year since 2020. The New Zealand dollar eased slightly to $0.57875 but remained positioned for a 3.4% yearly rise, breaking a four-year losing streak.

Dollar Industries Limited , a prominent player in the Indian textile industry, has received formal reaffirmation of its credit ratings from Acuite Ratings Research Limited. The company disclosed this development to stock exchanges on December 18, pursuant to Regulation 30 of SEBI listing regulations.

Updated Credit Rating Details

Acuite Ratings has reaffirmed Dollar Industries' strong financial position across its bank facilities. The rating action covers an increased facility amount compared to previous assessments:

Bank-wise Facility Breakdown

The reaffirmed ratings cover Dollar Industries' diversified banking relationships across major financial institutions:

Financial Strength and Implications

The ACUITE AA- rating for long-term instruments indicates a high degree of safety regarding timely servicing of financial obligations, carrying very low credit risk. The ACUITE A1+ rating for short-term instruments suggests a very strong degree of safety and lowest credit risk.

The rating letter, issued on December 17 and valid until November 1, 2026, confirms the company's robust financial health. The stable outlook indicates that Dollar Industries is well-positioned to maintain its financial performance in the near to medium term.

Regulatory Compliance

Company Secretary Abhishek Mishra communicated the rating reaffirmation to both NSE and BSE, ensuring full compliance with disclosure requirements. The rating action reinforces Dollar Industries' strong market position in the textile industry and provides confidence to investors and lenders about the company's creditworthiness.