War with Iran boosts the US dollar

The military conflict in the Middle East has significantly increased demand for the U.S. dollar.

According to Reuters, following the joint U.S.-Israeli military operation against Iran, investors have been moving large sums into the dollar — the most liquid asset in the global financial system. As a result, the dollar index rose by approximately 2% against other currencies over the past two days.

Matt King, founder of the analytics firm Satori Insights, attributes this surge to capital flows being redirected: investors are quickly closing speculative positions that had supported markets in recent months and are instead moving into safe, liquid assets. Consequently, many European and Asian markets are declining; for example, South Korea’s KOSPI index has dropped nearly 20% over two days.

Before the escalation, the dollar had already been under pressure — in January, the index fell about 2%, reaching a four-year low, and it lost more than 10% over the past year.

Analyst Jeffrey Gundlach believes this trend may continue in the long term, recommending that investors increase their share of real assets and invest in emerging market equities.