The U.S. dollar is likely to emerge as a surprisingly lucrative yield play this year given the relative strength of the U.S. economic recovery, a key executive at Liechtenstein's LGT Bank in Asia said.

"It's not a shout from the rooftop story, but from a relative perspective it's the best story around, and we don't see it getting a great deal worse unless we get a complete implosion in Europe," Simon Grose-Hodge, head of investment advisory for South Asia at LGT Bank in Singapore, told Dow Jones Newswires Thursday.

The group, which is headed by Prince Max von und zu Liechtenstein, has CHF88.1 billion in assets under management, of which about 3% is held by the Liechtenstein royal family. The bank has traditionally held a conservative footing on its investment strategies and currently sees wealth preservation opportunities in U.S. assets, especially high-yield bonds, some of which have been yielding as much as 9%.

"We think that kind of premium is essentially at a recessionary level and we think default risk is low because of the balance sheet repair that has gone on," Grose-Hodge said.

"It's looking more like an equity return for a fixed-income product, so the risk-reward is starting to look a lot more appealing."

To that end, defensive sectors such as healthcare and technology are preferred, especially when compared with extremely low-yielding U.S. Treasurys and the sovereign bonds of other nations.

He expects the Dollar Index, a measure of the U.S. unit's value compared with six currencies, could appreciate by as much as 8%-to-9% this year and the greenback to rise as much as 5%-to-6% against Asian currencies. At 0800 GMT, the Dollar Index was at 80.087. In May last year, it hit its 2011 low of 72.696.

The dollar's gains could to be driven by the possible passage of "tax holiday" legislation in the U.S. this year, which would allow U.S. corporations to repatriate some of their global profits back into local investments at a more favorable tax rate. A similar window of tax relief in 2005 proved a significant impetus for the U.S. currency.

And while the prospect of a third round of quantitative easing--or QE3--by the Federal Reserve lingers as a potential drag for the U.S. dollar, a wider global decline in the interest rate environment as Asian and central banks look to loosen their monetary policies will mean the relative interest rate differentials are significantly reduced.

"What was the big negative specter hanging over the dollar is not nearly as big a negative--it's in the mix with everything else," Grose-Hodge said.