Investor anxiety over stalled US-Iran peace negotiations weighed on the U.S. dollar, which slipped 0.18% to 98.465 on the dollar index on Monday. Brent crude rose 1% to $107.20 a barrel, while U.S. West Texas Intermediate climbed 1.5% to $95.80, as the ongoing Middle East war disrupted energy flows. The conflict has shut the Strait of Hormuz, a route for about 20% of global oil and gas shipments, fuelling inflation fears and clouding global growth prospects. The dollar had gained in March as investors sought safe-haven assets after the war began, but has since given up most of those gains.
The euro steadied at $1.1726, paring earlier losses, while sterling edged down to $1.3544. U.S. President Donald Trump cancelled a planned visit by his envoys to Islamabad, stating Iran could reach out if serious about ending the two-month war. However, a report by Axios citing unnamed sources indicated Iran submitted a new proposal through Pakistani mediators to reopen the Strait of Hormuz and end hostilities, with nuclear talks deferred.
Markets await key central bank decisions this week, including from the Bank of Japan, expected to hold rates steady on Tuesday but signal possible hikes by June. Japanese officials told Reuters the BOJ remains committed to raising rates despite energy-driven inflation risks. The yen held at 159.26 per dollar, near the 160 level that could trigger intervention by Tokyo.
The U.S. touts diplomatic channels while publicly dismissing engagement, yet relies on backdoor talks through Pakistan to reopen a vital oil route. Iran's offer to negotiate through third parties exposes the contradiction in Washington's claim of disengagement. The prolonged closure of the Strait of Hormuz directly threatens energy markets that Nigeria depends on for fuel imports. Any further delay in reopening the waterway risks worsening Nigeria's existing fuel supply strain.
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