Mitsubishi UFJ: If safe-haven demand rises, the US dollar may continue to rise

On March 27, Derek Halpenny, an analyst at Mitsubishi UFJ, said in a report that if the scale of capital inflows into safe-haven assets increases due to the conflict in Iran, the US dollar may strengthen further. "If we are about to enter a period of more risk aversion and stocks see larger declines, then we expect the dollar to strengthen further," he said. In this case, terms of trade and yield dynamics are unlikely to have much impact on currency direction. He said that in a more severe scenario, if Brent crude oil prices rise from the current US$110 per barrel to the US$120-US$160 range and the stock market suffers a greater blow, the US dollar index may rise to near 105.