Asian currencies linked to the artificial intelligence boom are expected to experience significant gains against the declining dollar in the upcoming year, according to insights from Sophia Drossos, a strategist and economist at Point72 Asset Management. Drossos projects a continued weakening of the dollar as it moves toward 2026, though at a more moderate pace compared to the 7.1% decline observed this year.
Drossos highlighted that the nations most likely to benefit from this downturn are those in Asia whose currencies have not fully capitalized on the substantial rally in AI-related equities. Particularly, she cited China and South Korea as potential frontrunners for currency appreciation. “Korean equities have really outperformed this year, but the currency is still relatively weak,” she noted during an interview in New York.
Emerging-market equities have been significantly buoyed by robust performance from Asian technology companies this year, with a Korean stock index soaring approximately 70% and Chinese stocks rising more than 35%. In contrast, the South Korean won and Chinese yuan have not kept pace, making them strong candidates for gains as AI-related investments continue to expand globally. While the won has appreciated about 1% in 2025 following four consecutive years of losses, the offshore yuan is up over 3% amid easing US-China trade tensions, yet it ranks only fifth among Asian currencies this year.
On the other hand, fresh economic data expected from the US, particularly after the conclusion of the federal government shutdown, may indicate a moderation in economic growth. Drossos believes this could set the stage for potential interest rate cuts by the Federal Reserve in December, which would likely contribute to a weaker dollar.
All currencies in the Group of 10 have appreciated against the dollar this year, which has faced headwinds from trade tensions and concerns about the economic outlook. The Bloomberg Dollar Spot Index is on track for its worst annual performance since 2017, although US stock indices have reached record highs. Drossos pointed out the contrast, stating, “Even though the US has done well, other countries have done even better. Global investors have taken advantage of cheaper valuations in other economies.”
