By Micah Jonah
March 23, 2026
The US dollar surged on Monday as escalating threats, military strikes in the Middle East rattled global markets, pushing investors into safe-haven assets.
The yen and the euro tumbled, while the Australian dollar, often seen as a barometer for global risk appetite, fell sharply amid stock sell-offs across Asia.
Japan has signaled readiness to intervene to calm forex volatility, with top currency diplomat Atsushi Mimura warning that speculative activity could worsen market instability.
The International Energy Agency (IEA) has described the crisis as more severe than the oil shocks of the 1970s, with potential to disrupt energy supply and drive inflation worldwide. IEA Executive Director Fatih Birol said the current tension could hurt countries reliant on energy imports while benefiting oil-exporting nations.
Meanwhile, equity markets across Asia fell sharply, with Japan’s Nikkei down 5 percent at one point. Global debt markets also reacted, as U.S. Treasury yields hit near eight-month highs, raising borrowing costs worldwide.
The crisis escalated over the weekend as Israel launched wide-scale strikes on Tehran, while Saudi Arabia reported the interception of two ballistic missiles. President Donald Trump issued new threats against Iran, signaling possible strikes on critical infrastructure, while Tehran vowed tit-for-tat retaliation.
Market analysts warn that prolonged conflict could trigger further strengthening of the dollar, putting pressure on other major currencies. According to Joseph Capurso of Commonwealth Bank of Australia, “If markets price a U.S. tightening cycle, the USD will lift strongly against all currencies. Riskier currencies like the AUD and NZD could face downward pressure.”
Central banks are already turning hawkish in response to rising inflation, especially from energy price shocks. The European Central Bank and Bank of England kept rates on hold but signaled vigilance, while Japan hinted at a possible rate hike as early as April.
Cryptocurrencies remained relatively stable, with bitcoin gaining marginally to $68,220, while ether rose to $2,063.
The ongoing conflict continues to create uncertainty for investors, with analysts warning that extended escalation could affect global trade, commodity prices, and currency markets, including the naira.
