Gregor Stewart Hunter
SINGAPORE, March 12 (Reuters) – The safe-haven dollar hovered near its strongest level this year on Thursday as rising oil prices threatened to spur inflation and force central banks around the world to adopt a tougher policy stance.
In early Asian trading, the euro fell 0.1% against the dollar to $1.1549, near its lowest level since November.
The yen briefly fell below the $159 mark against the U.S. dollar, falling 0.2% to $159.23, close to its lowest level since July 2024.
The Australian dollar fell 0.1% to $0.7148 and the New Zealand dollar fell 0.1% to $0.5907.
Sterling fell 0.2% to $1.3385.
Oil market volatility continued to climb, with Iran saying the world should prepare for $200 a barrel crude, its forces attacking commercial ships on Wednesday and ship traffic through the Strait of Hormuz reduced to a trickle.
Economists warn that soaring oil prices will push up energy costs and dampen global economic growth as the supply outlook worsens, with risks rising as the conflict drags on.
U.S. President Donald Trump said on Wednesday that Washington was in “very good shape” in its war with Iran and that the United States was “going to look very strongly at the Strait.” However, three people familiar with the matter told Reuters that U.S. intelligence showed Iran’s leadership remained largely intact and was not at risk of collapse after nearly two weeks of relentless U.S. and Israeli bombing.
“President Trump keeps saying that even overnight the war will be over soon, but it’s not clear to us whether that’s really up to him,” said Rodrigo Catrill, currency strategist at National Australia Bank in Sydney.
“We should expect continued volatility in energy prices,” he said on the podcast.
“The Strait of Hormuz is not just about oil, it’s about liquefied natural gas, it’s about fertilizers,” he added. “The longer you go without capacity, the more pressure on prices will continue.”
Brent crude rose 6.9% to $98.30 at the start of Asian trading, even as the International Energy Agency agreed on Wednesday to release a record 400 million barrels of oil from strategic stocks in response to a surge in global crude prices.
Cboe’s oil market volatility gauge surged to 121.01 on Wednesday, the highest level since the early days of the pandemic in 2020. The indicator has risen in seven of eight trading days since the conflict began.
Risk appetite took a further hit after U.S. President Donald Trump’s administration on Wednesday launched a new trade investigation into industrial overcapacity in 16 major trading partners, a move aimed at rebuilding tariff pressure after the U.S. Supreme Court struck down a core element of Trump’s tariff plan last month.
