Goldman Sachs Bets on Asia as Dollar Weakens: What Investors Need to Know

Goldman Sachs’ recent repositioning reflects a broader strategic conviction that the U.S. dollar is entering a sustained period of weakness against peer currencies, driven by structural and policy-induced pressures. The bank’s forecasts — now placing USD weakness against the Euro, Pound, and Yen as central rather than tail risks — rest on several pillars: tariffs undermining U.S. profitability and consumer income; signs of slowing U.S. growth; and challenges to U.S. policy predictability eroding trust in dollar-denominated assets. [3][4][5]

Against this backdrop, Asia (excluding Japan) emerges as a prime beneficiary. Goldman Sachs has reorganized its APAC investment banking operations into a single unit under Iain Drayton to foster cross-border deal flow and better capture capital market opportunities, particularly equity capital markets (ECM), where APAC has already seen $14.5 billion in ECM transactions in 2025. [5]

Investor behavior reinforces Goldman’s view. Emerging market equities and currencies have rallied in 2025, with the MSCI EM index seeing nine straight months of gains. GS projects additional upside in EM and Asia markets driven by capital inflows, strong earnings (notably in tech sectors), and a weaker USD. Particularly well positioned regions include China, South Korea, and Singapore. [7][5][8]

Nonetheless, risks remain considerable. Forecasts assume moderate Fed rate cuts rather than abrupt loosening; unexpected economic resilience in the U.S., geopolitical uncertainty, or renewed strength in global growth could reverse USD downtrends. In Asia, high exposure to U.S. tariffs and supply chain disruptions remain headwinds. Valuation overstretch in EM ex-Japan, and policy risk in China and South Korea, also temper upside.

Strategically, this shift has several implications: investors are likely to increasingly overweight Asian equities and non-USD assets; firms like Goldman are redeploying capital (both personnel and deal flow) to Asia; diversification is accelerating among sovereign and private portfolios; and FX strategies may prioritize Asian currencies and inflation hedges. ,

Open questions include: How far can the USD fall before inflationary risks and import costs force a policy pivot? To what extent will Asia’s economic fundamentals (growth, corporate governance, inflation) absorb high inflows without overheating? And how durable is the shift in central banks’ reserve composition away from USD, especially amid global financial stress?