Geopolitical tensions in the Middle East are exerting upward pressure on both energy prices and the US Dollar (USD). According to analysts at ING, while the conflict creates a supply-side shock, the impact on currency markets may be more contained than in previous years. Europe is currently viewed as being in a stronger position to handle energy disruptions compared to the crisis faced in 2022. Furthermore, the Federal Reserve is expected to refrain from aggressive monetary tightening in direct response to this specific geopolitical shock. This suggests that while the USD remains a safe-haven beneficiary, its potential for further significant gains might be limited. Meanwhile, emerging market currencies like the HUF, IDR, and PHP remain sensitive to shifts in global risk sentiment and rising energy costs.
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