Australian Dollar Weakens, Risk Sentiment Pressured by Middle East Tensions
The Australian dollar weakened past 0.69 per US dollar on Monday, March 9, extending its decline from last week. The weakening occurred as escalating tensions in the Middle East prompted market caution and dampened appetite for riskier assets.
With the conflict showing no signs of abating, investors reduced exposure to risk-sensitive currencies, including the Australian dollar. Rising geopolitical tensions also fueled concerns about a surge in oil prices that could potentially raise global inflation.
Domestically, Australian Energy Minister Chris Bowen stated that the country's fuel reserves stood at 36 days for gasoline, 34 days for diesel, and 32 days for aviation fuel. These figures are below the International Energy Agency's recommendation of 90 days of reserves, heightening market concerns about energy supply vulnerabilities.
Pressure on the Australian dollar also came from a strengthening US dollar, as markets assessed the Federal Reserve's potential to hold back on interest rate cuts. The US dollar also benefited from safe-haven flows as geopolitical tensions escalated, including after President Donald Trump demanded Tehran's unconditional surrender.
Source: Newsmaker.id (asd)