Dollar nears best monthly rise since 2024 due to US war with Iran

The U.S. dollar index, which shows the ratio of the U.S. currency to a basket of world currencies, in March may show the strongest growth for the month since 2024, reported Seeking Alpha. The war with Iran has led to a sharp redistribution of global capital flows toward protective assets, the publication explains: investors are looking for liquidity and stability amid increasing uncertainty.

On the last trading day of last month - February 27 - the ICE U.S. Dollar Index (DXY) closed at 99.2 points. By the end of trading on Thursday, March 30, the growth was about 1.3% for the month. At the same time on Friday, the index declined by 0.64% to 99.87 points during the trading day, but then recovered some of the losses.

The conflict in the Middle East has increased fears of disruptions in oil and gas supplies, which has pushed up oil and gas prices and made it more difficult to fight inflation in different parts of the world, Seeking Alpha recalls. This, in turn, increased demand for the dollar and strengthened its status as a protective asset, the publication explains.

Other currency markets reacted to the conflict with a decline: the euro and the yen weakened over the month, and the currencies of developing countries were under pressure, which emphasizes the scale of the defensive positioning of investors, explains Seeking Alpha. The strengthening of the dollar is also supported by the revision of expectations on the monetary policy of the U.S. Federal Reserve: investors are reassessing the pace of possible rate cuts, taking into account the increased inflationary risks associated with rising oil prices, the publication noted.

While the future dynamics of the conflict remain uncertain, March confirmed a consistent pattern: in times of geopolitical turmoil, the dollar maintains its dominant role as the world's primary financial safe haven, Seeking Alpha notes.

This article was AI-translated and verified by a human editor