US Dollar Strengthens, Oil Prices Surge Amidst Stalled Iran Peace Talks

Kathmandu. The US dollar strengthened in Asian markets on Monday, and oil prices saw a significant increase after peace talks between the United States and Iran stalled. The tension in West Asia further escalated after President Donald Trump rejected the peace talks proposal on Sunday, calling Iran's offer 'completely unacceptable'. Iranian media reported that Iran sought a complete end to the war, cancellation of sanctions, war reparations, and recognition of its control over the Strait of Hormuz.

As the conflict in West Asia enters its eleventh week, the strategically important Strait of Hormuz is almost completely closed, disrupting about 20 percent of the world's oil and gas supply. According to Bruce Kasman, an economist at JP Morgan, although energy prices have risen, they have not yet reached a level that would halt economic expansion, but severe pressure on the supply system could begin from June.

On Monday, Brent crude oil rose by 4.3 percent to $105.47 per barrel in Asian trading, while US crude oil increased by 4.7 percent to $99.92.

Due to this geopolitical risk, demand for the dollar as a safe investment has increased. The dollar rose by 0.33 percent against the Japanese yen to 157.16 yen, while the euro fell by 0.24 percent. The rise in oil prices has added further economic challenges for Japan and Europe, which are heavily reliant on oil imports. Japan is preparing to intervene to curb the decline of its currency.

Stock markets showed mixed reactions. South Korea's Kospi index rose by 4 percent, while Japan's Nikkei fell by 0.36 percent. China's blue-chip index rose by 1.4 percent, while Hong Kong's Hang Seng fell by 0.3 percent. Data showed that China's producer prices reached their highest point in 45 months, highlighting the impact of rising global energy costs.

Amidst this tense situation, President Trump is scheduled to visit China from Wednesday, where he will meet with Chinese President Xi Jinping. They will discuss the West Asian crisis, as well as trade, Taiwan, artificial intelligence, and nuclear weapons.