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The dollar rallied to a three-month high on Friday. It seemed poised to notch a second straight weekly gain since the conflict in Iran escalated, with market turbulence positioning it as a primary safe-haven asset.
The dollar index, a measure of the greenback against a basket of currencies, soared to its highest point since November 26, buoyed by its safe-haven stature and the US’s net energy export status. The index ticked up 0.16% to 99.83, gearing up for a 1% rise this week. Meanwhile, sterling fell 0.08% to $1.333, and the euro dipped 0.08% to $1.1501, a level unseen since November 21.
In stark contrast, the euro plummeted to its lowest mark since November, whilst Japan signalled potential measures to buttress the yen, which stumbled to a 20-month low. According to News.Az, citing foreign outlets, the yen tumbled to 159.69 per dollar, its weakest since July 2024.
The escalating oil prices had the US permitting sales of some Russian petroleum products, previously sanctioned due to Moscow’s aggression in Ukraine. With Iran intensifying assaults on oil and transport installations across the Middle East, and Supreme Leader Mojtaba Khamenei vowing to block the Strait of Hormuz, tension brewed. Japan, a significant energy importer, now faces a dual dilemma—a rise in energy costs compounded by a diminished safe-haven allure for the yen, as noted by Tony Sycamore of IG Markets.
This dramatic rise in energy prices, triggered by the Middle Eastern strife, ironically counters US President Donald Trump’s economic goals. Gavin Friend, a senior markets strategist at National Australia Bank in London, observed, “Currently, the market’s focus has shifted. It’s not about diversification, it’s inflation, and it’s lower growth.” He described the situation as a “toxic mix” that prolongs with the crisis.
The yen’s slide toward the critical 160 per dollar level earlier in January prompted the US to conduct so-called rate checks. These actions often herald intervention, aiding a rally in Japan’s currency. As the days progress, the financial landscape seems nothing short of a rollercoaster.
— News.Az
By Ulviyya Salmanli
