The currencies of most major economies have appreciated against the US dollar since the start of 2025, despite the massive jump in US tariffs, Fitch Ratings says in its new FX Market Monitor. Developed market currencies (except Australia) have appreciated by an (unweighted) average of 4.5% since end-2024. Market participants’ concerns about the adverse impacts of tariff hikes on US growth appear to have had a more pronounced impact on the value of the US dollar than the prospect of a narrower trade deficit.

Emerging market currencies show more idiosyncratic movements, with significant appreciations of the Russian rouble (about 30%), the Brazilian real and the Polish zloty, but also a weakening of the Turkish lira and the Indonesian rupiah.

Since January 2023, the yen has depreciated by 12% against the US dollar, while the euro and the Swiss franc have strengthened (by 2.7% and 7%, respectively). Among emerging markets, the number of Turkish lira per dollar has broadly doubled, while the Korean won and rupiah have depreciated by 15% and 7.5%, respectively.

Nominal effective exchange rates (NEER) show averages of bilateral rates weighted by countries’ trade patterns. The US dollar NEER remains close to a multi-decade high, despite recent US dollar weakness, having appreciated steadily between 2015 and 2024. Switzerland’s NEER is close to an all-time high, while the euro NEER has fallen slightly from its record high in the summer of 2024. The NEERs of Japan and the UK are much lower than in 2000 (26.5% and 15.8%, respectively). China and Poland are the only countries of the Fitch-20 emerging market economies in which the NEER has appreciated since 2000.

Real effective exchange rates (REERs) adjust NEERs by relative prices (or costs) at home and abroad, and are typically more stable as exchange-rate movements partially offset price divergences. Japan’s REER (in CPI terms) has fallen by more than 55% since 2000, and the UK’s by more than 17%. Switzerland’s REER has increased steadily, while the REER of euro area countries has declined moderately after the global financial crisis. Poland’s REER has increased by about a third, while China’s has increased by 24% since 2000, notwithstanding the decrease since early 2022 related to deflationary pressures in the Chinese economy.