Middle East Tensions Drive Down Australian and New Zealand Dollars

The Australian and New Zealand dollars declined against major currencies between August 12 and 13, 2026, driven by a global risk-off mood and spiking crude oil prices. Market volatility centered on the Strait of Hormuz, where the Federal government of the United States maintained a blockade of Iranian ports and fired upon a Panama-flagged vessel attempting to bypass the restriction.

Iran threatened to keep the Strait of Hormuz closed unless the United States provides monetary compensation for war-inflicted damages. This instability coincided with Houthi forces in Yemen launching ballistic missile attacks on the port city of Al-Makha and targeting shipping vessels in the Bab el-Mandeb.

In response to the crisis, the Government of Pakistan announced efforts to bring the United States and Iran back to peace negotiations. This diplomatic push caused West Texas Intermediate crude prices to inch lower. Meanwhile, Reserve Bank of Australia Governor Michele Bullock warned that inflation risks remain, stating the board is ready to increase interest rates if price pressures persist.