Dollar surges as Trump ultimatum to Iran nears deadline

Monday 23 March 2026 - 12:50

By: Dakir Madiha

Dollar surges as Trump ultimatum to Iran nears deadline

The US dollar strengthened sharply as tensions between Washington and Tehran escalated ahead of the expiration of President Donald Trump’s ultimatum over the Strait of Hormuz, driving investors toward safe-haven assets and pressuring Asian currencies and equities.

The dollar index rose to around 99.5, extending gains that began with the outbreak of the US and Israeli military campaign against Iran in late February. Market sentiment shifted after hopes of de-escalation faded, replaced by renewed threats targeting critical infrastructure across the Gulf region.

Trump issued a 48-hour ultimatum warning that the United States would strike Iranian power plants if the Strait of Hormuz is not fully reopened. Iran rejected the demand, with President Masoud Pezeshkian dismissing the threats and military officials warning of retaliation against US and Israeli-linked infrastructure across the region.

The Strait of Hormuz, a key route for roughly one-fifth of global oil and gas supply, has seen severely restricted traffic since early March. The ongoing disruption has kept energy prices elevated, with Brent crude trading near $113 per barrel and US benchmark oil fluctuating between $98 and $101.

The energy shock has had a significant impact on currency markets, particularly in Asia. The Indian rupee fell to a record low near 93.94 against the dollar, while the South Korean won dropped to its weakest level since 2009. Regional stock markets also declined, with South Korea’s Kospi index falling more than 6 percent. The Philippine peso remained under pressure, and India’s foreign exchange reserves dropped by over $7 billion in a week as authorities intervened to stabilize the currency.

Central banks are facing increased uncertainty. The Federal Reserve held interest rates steady, with Chair Jerome Powell stating that the economic impact of the conflict remains unclear. The European Central Bank and the Bank of England also maintained their policy stance, while the Bank of Japan signaled the possibility of a rate increase as early as April.

Analysts note that countries benefiting from higher energy prices may outperform those facing rising import costs. With no diplomatic resolution in sight and the ultimatum nearing its deadline, markets are bracing for further escalation and broader economic consequences.