By Shayne Heffernan, May 6, 2025
The U.S. dollar’s grip as the world’s reserve currency is slipping fast, a reality underscored by economic shifts in Asia and the Middle East that favor regional currencies and alternative assets. As the owner of Knightsbridge, I’ve positioned our company to thrive in this changing landscape, particularly through our focus on these dynamic regions.
Asia’s currencies are gaining ground against the dollar. Reuters reported today that the Chinese yuan’s midpoint rate hit 7.3043, its weakest since February, yet Beijing is holding it above the 7.2 threshold despite U.S. tariffs of 104% on Chinese goods, per Bloomberg. This signals a deliberate move away from dollar dependency. Japan’s yen, Singapore’s dollar, Taiwan’s dollar, the Korean won, and Thai baht are also strengthening, according to market data. The Asian Development Bank projects regional growth at 4.9% in 2025, easing to 4.7% in 2026, with South Asia at 6.0% in 2025, led by India’s 6.2% growth, per IMF projections. Inflation is cooling—China’s headline rate is forecast at 0.4% in 2025, South Korea’s at 1.9%, per the Asian Development Bank—allowing central banks to ease monetary policy and boost growth. But the Philippines’ peso has hit a low of 59 to the dollar, with economists predicting a drop past 60 by mid-2025 due to rate cuts, as noted by McKinsey.
In the Middle East, economic indicators also point to a dollar retreat. The IMF forecasts growth in the Middle East and North Africa (MENA) at 2.6% in 2025, rising to 3.4% in 2026, despite conflicts and oil production cuts. Saudi Arabia’s growth is projected at 3.0% in 2025, but its budget deficit will hit 3% of GDP, with $37 billion in borrowing planned, per ICAEW. The GCC’s non-energy sector is expected to grow by 4.4%, showing resilience, while inflation in the GCC is pegged at 2.3% in 2025, stabilizing at 2% long-term, according to ICAEW. Iran’s currency has plummeted from 600,000 to 920,000 rials per dollar between August 2024 and March 2025, triggering the impeachment of its finance minister, as reported by the Wilson Center, highlighting economic strain and a push for non-dollar trade.
Knightsbridge has been preparing for this shift, focusing on Asia and the Middle East for growth. Our platform, KXCO.io, enables non-dollar transactions, allowing businesses to trade in local currencies or digital assets, sidestepping U.S. sanctions risks. Russia and China are already using yuan and gold, and the Middle East is exploring similar options, per the Atlantic Council. Knightsbridge’s strategy aligns with the economic diversification in these regions, supporting clients navigating this transition.
The U.S. is hastening the dollar’s decline with a $1.3 trillion trade deficit in March and Trump’s tariffs, which are pushing trade partners away, as Reuters notes. Investors are turning to gold, the yen, and the Swiss franc, per Investing.com. With China targeting 5% growth in 2025 and the Middle East diversifying, a new financial order is emerging, and Knightsbridge is ready to lead.
