The International Monetary Fund (IMF) is conducting scenario analyses to identify countries that might need additional financial assistance should the conflict in Iran persist. This evaluation involves IMF country desks providing detailed assessments covering current account conditions and potential funding requirements, with a focus on nations already engaged in active financing programs.
Meanwhile, the US dollar extended its gains against major currencies as traders remained cautious about a near-term de-escalation in the Iran war. Despite reports of the US submitting a 15-point proposal for discussions with Tehran, ongoing hostilities continued with Israel and Iran exchanging airstrikes. President Donald Trump indicated progress in talks with Iran, but Tehran denied any direct negotiations, maintaining investor uncertainty.
The US dollar index, which measures the greenback’s strength against a basket of six currencies, rose by 0.23% to 99.41. The euro declined 0.19% to $1.1585, and the British pound also fell 0.19% to $1.3387. Sterling received little support from data showing British consumer price inflation steady at 3% annually in February, unchanged from January, with expectations that inflation could rise due to the Middle East conflict driving up prices.
Shaun Osborne, chief FX strategist at Scotiabank in Toronto, noted that the dollar’s resilience suggests the foreign exchange market is adopting a different perspective compared to equities and bonds. He explained that if a clear resolution were emerging, the dollar’s premium would likely begin to diminish. This view contrasts with the optimism seen in equities and oil markets, where stocks rose and oil prices showed signs of easing.
On Wednesday, the S&P 500 increased by 0.8%, while global crude oil prices dropped 3.8% to $100.54 per barrel, reflecting investor hopes that a resolution to the conflict may be approaching.
