Dollar Strengthens as US-Iran Clashes Drive Global Safe-Haven Flows

The US dollar firmed across major currency pairs on Friday as investors sought safe-haven assets in response to renewed military hostilities between the United States and Iran. The yen, meanwhile, found partial stability as market participants priced in the risk of currency intervention by Japanese authorities amid excessive volatility.

Dollar strength in risk-off environments reflects the currency's enduring reserve status and the tendency of global investors to reduce exposure to emerging market and commodity-linked currencies during geopolitical stress. The move adds pressure on currencies already under strain, including those of energy-importing economies.

For Pakistan, dollar appreciation against the rupee would compound the impact of rising oil prices, increasing the import bill in local currency terms at a time when the State Bank is carefully managing foreign exchange reserves. The dual pressure of a stronger dollar and higher crude prices represents one of the more challenging external environments for the Pakistani economy in recent months.

Analysts noted that the yen's stabilisation was partly technical, driven by market caution about provoking Bank of Japan or Ministry of Finance intervention. The broader currency picture remained unsettled, with the direction of the US-Iran conflict expected to dominate sentiment through the remainder of the trading week.