Mint Quick Edit | The dollar still gains when conflicts erupt
The US currency’s slide was arrested and reversed a bit by Israel’s attack on Iran. The dollar’s dominance is resilient alright, even as the endurance of America’s power in West Asia is back in geopolitical debate.
For all the worries about the US dollar, it does not seem ready to abdicate its global dominance anytime soon. The prospect of a full-scale war in West Asia after Israel attacked Iran on Friday sent investors globally rushing into the safety of greenback assets.
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This drove the dollar up against a basket of currencies used by analysts to track its strength, arresting a slide that had taken it to its lowest level on this index since March 2022 on Thursday.
The reversal is consistent with the usual pattern every time geopolitics turns grim or uncertain. Its safe haven status remains intact despite America’s isolationist policies. It helps the US currency that it has no obvious challenger.
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Also, some experts expect the rise of dollar-pegged stablecoins used for digital transactions to strengthen it as the world’s top medium of exchange. While flights of capital to safety are usually US-bound, how Israel-Iran hostilities will eventually impact US power is unclear; it being too closely identified with Israel could come to undermine the political order it backstops in West Asia.
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For now, though, the dollar’s value needs to be tracked simply because it matters much to almost every economy. And that includes India’s.
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