Welcome to the November 2025 edition of Netra, where we present data-driven market insights that can inform your investing decisions.

This month, we’ll focus exclusively on the current state and future prospects of the US dollar.

There is a relatively popular narrative going around right now that we might be witnessing the demise of the dollar, or at least a de-dollarisation.

Other related narratives are that a new world currency might emerge to replace the dollar, and that we might also see a return to the gold standard.

However, a closer look at the data suggests that the dollar might be far from finished.

Debt, de-leveraging, and the US economy

For starters, let’s consider the chart below, which shows the US’s total credit to the non-financial sector (i.e. the cumulative debt of federal, state, and local governments, corporate businesses, and households in the US) relative to GDP.

As you can see, the total credit to the non-financial sector is roughly back to pre-Covid levels!

When we analyse this in a more fine-grained manner, we see that over the last 16 years, households as well as state/local governments have reduced their leverage relative to GDP, and non-financial corporates have more or less held steady.

In contrast, the federal government has borrowed heavily over this period. As the chart below indicates, the US federal debt-to-GDP ratio has gone from 80% in 2009 to nearly 120% in 2025.

What we can conclude from this is that while the US debt situation at the federal level is stretched, it’s not yet dire. And at the whole-economy level, the US debt situation is stretched but improving, not deteriorating.

Sovereigns retreat, but institutions rush in

And that’s not all: there’s an important sign that the dollar might be ready to bounce back.

While foreign sovereigns (i.e. governments) are stepping back from their appetite for US government bonds, private institutional investors have ramped up their US Treasury purchases, as can be seen below.

Indeed, the fundamentals for private-sector demand in dollar assets seem to be robust: relative real returns in US 10-year bonds are still appealing in several countries.

Why the dollar might hold on to its crown

Thus, while talk of de-dollarisation, new global currencies, or a return to the gold standard dominates headlines, the real picture might be more favourable for the dollar.

Dollar-skeptics usually point to the following two “facts”:

• “The US is borrowing massive amounts of money, and its debt is unsustainable.”
• “The US is alienating its allies, due to which foreign demand for dollars/Treasuries is waning.”

Both these “facts” have some truth to them, but also important caveats.

As we saw above, the total non-financial credit is not exploding, private demand for US Treasuries is strong, and real US Treasury yields still stack up well.

All this implies that the dollar’s decline may have been overstated: the downtrend could stabilise or even reverse.

And the US Federal Reserve’s reluctance to lower the Fed Funds rate could further set a floor for the dollar’s decline.

The bottom line

Given all this, investors should remain open to the possibility that King Dollar might keep wearing its crown for a long time to come, and should calibrate their portfolios accordingly.

For more actionable insights backed by data and analyses, we invite you to read the latest edition of Netra in its entirety.