The Dollar’s Decline: A Structural Shift Toward EM Local Dominance

In this timely report, RBC BlueBay strategist Gautam Kalani argues that the end of the 15-year dollar bull market marks a pivotal moment for global portfolios — and a prime entry point into emerging market local assets.

Key Insights:

• Dollar Tipping Point: New US tariffs have sparked a structural reassessment of global exposure to US assets, with USD overvaluation nearing 40-year highs.

• Capital Reallocation Underway: Foreigners hold $26T in US assets; even marginal hedge shifts or outflows could amplify USD weakness.

• EM Opportunity: Elevated real rates, anchored inflation, and supportive policy cycles position EM local rates and currencies for outperformance.

Read the full report to explore why EM local is emerging as the new core allocation for global fixed income.