The war in Iran rages on without a clear end in sight, with market participants now bracing for the possibility that the conflict drags on for a matter of months, rather than just weeks.
Following the relatively calm initial reaction, we’ve seen a classic example of risk-off trading across financial markets.Stock markets have lost ground,investors have rushed to the safe havens (notably the US dollar),and energy prices have skyrocketed, with markets experiencing volatility not seen since Liberation Day.
The most pressing issue for financial markets is the ongoing closure of the Strait of Hormuz - one of the world’s primary oil shipping routes. A prolonged closure here would not only add to upward pressure on oil futures,but could have serious inflationary implications, while raising the risk of a global growth slow down and, potentially, recessions.
We outline in the following report the currencies that we think are well placed to perform well in this environment, and which are likely to under perform should the war continue to dragon without a clear end in sight.
* Resilience to energy shock score based on net energy imports as % of energy use
Gain the full breakdown of currency winners and losers as the conflict enters a new phase.
