The American Dollar Strengthens in the War with Iran 0 11

The Bloomberg Dollar Spot Index rose by 0.6% on Friday, marking the second consecutive week of gains. Since early March, the index has increased by 2.5%, reflecting a sharp turnaround in market sentiment following the onset of conflict between the U.S., Israel, and Iran.

The dollar is supported by the weakening of other currencies and rising oil prices — quotes have exceeded $100 per barrel. Currencies of energy-importing countries, including the Japanese yen and the euro, have been particularly pressured.

"The flow of negative geopolitical events from the Middle East is increasing the dollar's appeal as a safe-haven currency. It is hard to imagine that this will not continue in the short term, given that there are no signs of an end to the conflict," said Pioneer Investments strategist Paresh Upadhyaya.

Last year, the dollar was the weakest among 17 major global currencies, according to Business Insider. The Dollar Index (DXY), which measures its value against other foreign currencies, has decreased by about 10% since the beginning of the year.

There were several reasons for the decline in the exchange rate, but the main one was the easing of monetary policy by the U.S. Federal Reserve. The dollar was also affected by import tariffs imposed by U.S. President Donald Trump. Trade wars, accompanied by the introduction and increase of tariffs against various countries, were viewed by investors as a negative factor for economic growth and a source of uncertainty.

In addition, many countries attempted to diversify their currency operations and preferred national currencies in international trade, analysts noted.