US-Iran Conflict Drives Safe-Haven Dollar Gains and Oil Fears

Asian currencies traded within a narrow range on Tuesday as investors shifted toward the safe-haven U.S. dollar amid escalating conflict between the United States and Iran. The U.S. Dollar Index climbed to nearly 100.99, its strongest level since July 15, after the United States Central Command confirmed a ninth consecutive night of strikes on Iranian military targets.

Market instability intensified as Iran-backed Houthis in Yemen announced a naval blockade on Saudi Arabia. This move sparked fears of global energy supply disruptions and pushed crude oil prices higher, placing economic pressure on energy-importing nations including Thailand, India, Indonesia, and the Philippines. The Japanese yen remained near multi-decade lows during the volatility.

Other regional economic activity diverged from the conflict-driven trend. South Korea's won performed well following foreign-exchange liberalization, and the New Zealand dollar rose after inflation increased to 4.1%. Meanwhile, the Government of China maintained its benchmark lending rates, indicating a policy preference for targeted fiscal measures rather than broad monetary stimulus.