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Global currency and commodity markets stabilised slightly on Tuesday after a volatile start to the week triggered by the war involving Iran, United States and Israel. The U.S. dollar steadied against major currencies after earlier declines, following remarks from U.S. President Donald Trump that the conflict could end “very soon.”

Financial markets had been thrown into turmoil a day earlier amid fears that a prolonged war could trigger a major global energy shock. The conflict has disrupted oil and gas exports through the critical Strait of Hormuz, a vital shipping route for global energy supplies.

Although markets calmed somewhat after Trump’s comments, the broader environment remains highly uncertain as investors continue to assess the potential economic fallout from the conflict.

Dollar Holds Ground as Oil Prices Ease

In Asian trading, the U.S. dollar was largely steady against other major currencies after retreating from the highs reached during Monday’s market turbulence.

The currency traded at around 157.73 yen against the Japanese yen and about $1.1632 against the euro, reflecting a stabilisation following the sharp movements seen earlier.

Meanwhile, oil prices remained elevated but declined from the dramatic peaks reached at the start of the week. Brent crude traded at roughly $93 per barrel, still significantly higher than levels before the outbreak of the war but well below Monday’s surge toward $120.

The pullback in oil prices helped ease immediate concerns about a severe energy shock, although analysts caution that volatility could continue if the conflict escalates again.

Investors Remain Cautious

Despite the relative calm in currency markets, analysts say investors are far from convinced that the crisis is nearing resolution.

Rodrigo Catril, a currency strategist at National Australia Bank, warned that markets could continue to experience sudden shifts in sentiment as geopolitical developments unfold.

According to Catril, it remains unclear whether the Iranian leadership would be willing to pursue de-escalation, suggesting that the risk of renewed market volatility remains high.

The Islamic Revolutionary Guard Corps in Iran dismissed Trump’s suggestion that the conflict could end quickly, describing the remarks as “nonsense.”

Risk-Sensitive Currencies Under Pressure

Currencies closely linked to global economic sentiment weakened as investors remained cautious.

The Australian dollar slipped to around $0.7063, while the New Zealand dollar fell to roughly $0.5912. These currencies often decline during periods of geopolitical uncertainty or when investors shift toward safer assets.

The dollar, by contrast, has benefited from its traditional role as a safe-haven currency during times of crisis. The escalation of the conflict and disruption to energy markets prompted investors to move funds into U.S. assets, supporting the currency.

The British pound recovered from losses earlier in the week to trade around $1.3434.

Energy Prices and Global Growth Concerns

Investors remain concerned that sustained high energy prices could slow global economic growth. Rising oil costs increase expenses for businesses and households, effectively acting as a tax on economic activity.

At the same time, higher energy prices could complicate monetary policy by pushing inflation upward and making it harder for central banks to lower interest rates.

Analysts at Deutsche Bank noted that a broader market sell-off in risk assets would likely require several conditions to occur simultaneously: persistently high oil prices, a shift in central bank policy expectations and clear evidence of a slowing global economy.

Strategist Henry Allen said markets are now significantly closer to those thresholds than they were just a week ago, though the full conditions for a major downturn have not yet materialised.

Analysis: Markets Brace for Prolonged Volatility

The market reaction to the Iran war underscores how closely global financial conditions are tied to geopolitical developments in the Middle East.

While Trump’s comments about a possible quick end to the conflict helped stabilise markets temporarily, the underlying risks remain substantial. The disruption of energy supplies through the Strait of Hormuz continues to threaten global oil flows and could trigger renewed price spikes if the conflict intensifies.

For investors, the situation presents a delicate balance. On one hand, hopes for de-escalation could stabilise energy prices and reduce pressure on financial markets. On the other, continued fighting or further disruptions to oil shipments could quickly reignite volatility across currencies, commodities and equities.

Until there is clearer evidence of either de-escalation or escalation, markets are likely to remain highly sensitive to political developments, with the dollar continuing to benefit from its role as a global safe haven.

With information from Reuters.

California voters are being urged to put a poison-pill effort on the November ballot that would nullify a controversial proposed tax on the state’s billionaires.

Neither proposal has yet qualified for the ballot — supporters of each need to gather the verified signatures of hundreds of thousands of voters. But petitions that have been mailed and texted to California voters in recent days demonstrate the stakes in a contest that has drawn tens of millions of dollars in campaign spending.

“Government has wasted billions of our tax dollars on homelessness and many other failed programs with little to show for it,” reads the new mailing to voters. “We can’t afford more wasteful spending!”

The proposal is aimed at countering a proposed one-time 5% tax on billionaires assets that would fund healthcare for the state’s neediest residents, but opponents say it would lead to lost tax revenues as California’s wealthiest flee the state.

Mailers and texts recently sent to voters describe the new proposal as an effort to create a more accountable, transparent and effective state government that would require auditing of new state taxes and ensuring they comply with existing law.

The small-font description of the proposed initiative included in the mailing specifies that any new tax enacted after Jan. 1 must be deposited into the state’s general fund and conform with current state tax policy, which is an oblique reference to a prior voter-approved ballot measure requiring that a significant portion of the state’s tax revenue be spent on education.

If competing proposals appear on a ballot and are successful, the one that receives the most votes nullifies the other. There are other ballot measure proposals aimed at thwarting the billionaires tax.

The mailers and texts were funded by a committee called Californians for a More Transparent and Effective Government, which was funded by another group, called Building a Better California, according to the California secretary of state’s office.

Earlier this year, the latter group received a $20-million donation from Google co-founder Sergey Brin, $2 million from former Google Chief Executive Eric Schmidt and $2 million from Stripe CEO Patrick Collison, among donations from other Silicon Valley leaders, according to fundraising disclosure reports.

Attempts to reach spokespeople connected with the effort were unsuccessful Monday night.

Suzanne Jimenez, chief of staff at SEIU-United Healthcare Workers West, the primary union backing the billionaire tax, decried what she described as an effort by a small number of the state’s wealthiest residents to avoid paying their fair share.

“So far, those few billionaires are failing,” she said in a statement. “Despite the expensive and wasteful tactics by a small group of billionaires that aim to deny voters a choice on the billionaire tax in November, our growing coalition and volunteer base is on track with signature collection and gaining momentum. The public is crystal clear on the fact that keeping ERs and clinics open is more important than billionaires getting more tax breaks.”

California’s budget is notoriously volatile because it is largely dependent on taxes paid by its wealthiest residents. Revenue hinges on capital gains from investments, bonuses to executives and windfalls from new stock offerings, all of which are grossly unpredictable.

The billionaire tax would cost more than 200 of the state’s richest residents about $100 billion if a majority of voters support it on the November ballot.

The proposed tax would retroactively apply to billionaires’ assets as of Jan. 1, and has already prompted some of California’s wealthiest residents to leave the state. It has also created a wedge among Democrats. Some argue that it is necessary to address tax inequities that benefit the rich and harm everyone else. Among the supporters is Sen. Bernie Sanders (I-Vt.), who kicked off the billionaire tax proposal drive in February.

But others, notably Gov. Gavin Newsom, oppose the effort, saying policies that vary by state would drive innovators and businesses outside of California.

The South Korean won fell to a 17-year low against the U.S. dollar Monday amid heightened market volatility as oil prices spiked following the expanding conflict in the Middle East.

The won was quoted at 1,495.5 won per dollar at 3:30 p.m., down 19.1 won from the previous session, marking the weakest level since March 12, 2009, when the won-dollar rate hit 1,496.5 won during the global financial crisis.

After opening at 1,493 won, the won-dollar rate touched 1,499.2 won at 10:22 a.m., the lowest intraday level since that day, when the rate reached 1,500 won.

Investor sentiment was dampened by instability in global energy prices. The U.S. benchmark West Texas Intermediate (WTI) crude surpassed US$100 per barrel for the first time since July 2022 on Sunday (U.S. time).

The recent decline in the won has also been driven by a broad dollar rally amid concerns that the U.S.-Israeli operation could escalate into a prolonged regional war.

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A Republican from the South Bay who raised hundreds of thousands of dollars running unsuccessfully against Rep. Maxine Waters four times while promoting QAnon conspiracy theories was sentenced to four years in federal prison for misusing campaign funds, the Department of Justice announced Monday.

Omar Navarro, 37, pleaded guilty in June to a single count of wire fraud for defrauding his own election campaign. The perennial candidate had raised hundreds of thousands of dollars over the years from prominent right-wing figures while promoting QAnon conspiracy theories but never cracked 25% of the vote.

He was sentenced by U.S. District Judge Mark C. Scarsi, who ordered Navarro immediately remanded into federal custody. A restitution hearing will be scheduled at a later date to determine how much money Navarro must pay to compensate victims.

Narvarro ran to represent Los Angeles County residents in California’s 43rd Congressional District in the 2016, 2018, 2020 and 2022 election cycles.

From July 2017 to February 2021, he funneled tens of thousands of dollars in donations to his campaign committee back to himself through his mother, Dora Asghari, and friend Zacharias Diamantides-Abel, prosecutors said. In total, his scheme diverted around $266,00 in campaign funds, more than $100,000 of which went directly into his pocket, prosecutors said.

“Defendant could have used that money to buy radio advertisements, purchase billboard space, or send a mailer to aid him in the election,” prosecutors wrote in their sentencing memorandum. “He chose instead to steal his donors’ dollars and fund his lavish lifestyle, including using it to pay for Las Vegas trips, fancy dinners, and even criminal defense attorneys for his criminal stalking charge after he had the audacity to use his campaign money to pay a private investigator to stalk her.”

He set up a sham charity called the United Latino Foundation to embezzle additional funds for his personal use. He also wrote thousands of dollars’ worth of checks to Brava Consulting, a company owned by his mother. This money was allegedly payment for campaign work, but the bulk of it was simply funneled back to him.

Initially, Navarro denied the allegations publicly, writing on X last year that the claims were “baseless” and suggested Waters herself was behind the investigation. He pleaded guilty months later.

Prosecutors argued that a significant sentence was necessary given the “prolonged and pervasive” nature of his fraud and to discourage others from engaging in similar behavior “that undermines the very fabric of the campaign finance system, a system designed to promote trust in government.”

The other two people connected to the case were also criminally charged.

Navarro’s mother pleaded guilty in June 2025 to one count of making false statements after lying to the FBI when questioned about receiving funds from her son’s campaign. She will face up to five years in federal prison at her April 13 sentencing hearing.

Diamantides-Abel pleaded guilty in May 2025 to one count of conspiracy and awaits sentencing.

Authors: Ajay Kumar Mishra and Shraddha Rishi*

At the Davos World Economic Forum, Mark Carney, the prime minister of Canada, shared his thoughts on the hegemonic and subservient world order. When integration turns into a source of subordination, one cannot “live within the lie” of mutual benefit in the midst of a collapsing global order. The trading communities appear to have a hegemonic and subservient relationship as a result of the dollar’s adoption as the world’s reserve currency. Furthermore, the competing global order between the US and China appears to be caving in to Chinese modus operandi without investigating the reasons for US authoritarian dominance, which could result in the acceptance of Chinese domination. The recognition of the US dollar as the worldwide currency and its dominance over oil, one of the most traded commodities, have put the US in leadership of the world trading regime. Furthermore, it appears that China’s monopoly over rare earth elements (REEs) is giving the Chinese yuan the same reserve currency power. Therefore, the globe might witness a change of control from the US to China, thus jeopardizing the world trading system to the whims and fancies of the country holding the reserve currency.

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According to this essay, the dollar’s reserve currency status is the true cause of the world order’s disintegration, which equates to allowing the US to take the only seat at the table. It contends that a multipolar currency is essential for a multipolar world order. This understanding is necessary to prevent the rule of any country based on currency supremacy. Diversifying the currency basket for trade transactions is encouraged. To show how the currency dominance of a reserve currency would rise to currency imperialism, this article looks into the petrodollar problem and the duality of reserve currency and trade deficit to delegitimize the necessity of the dollar as a reserve currency. Any currency in question is subject to the same reasoning. Thus, a multi-currency trading framework is advocated in this article.

Geoeconomics of the Petrodollar Crisis’s Spiral

The dollar controls trade, payments, and reserves. About 96 percent of trade in the Americas, 74 percent in the Asia-Pacific area, and 79 percent in the rest of the world is denominated in the currency. About 60 percent of international and foreign currency claims (mainly loans) and liabilities (mostly deposits) are in US dollars. Its proportion of foreign exchange transactions is roughly 90 percent. Approximately 60% of the world’s official foreign reserves are in US dollars. Furthermore, in Q1 2025, the US dollar’s percentage of global foreign exchange reserves dropped to 53.6%. Additionally, the 50-year security agreement with Saudi Arabia to price oil only in dollars and invest surpluses in U.S. Treasury bonds in exchange for military protection expired in 2024. This could result in a shift toward accepting different currencies, albeit it won’t happen right away. Additionally, countries like Russia, China, and Iran are increasingly using non-dollar currencies for energy trade, aiming to reduce reliance on Western financial networks.

To achieve its geoeconomic goals, US authorities have attempted to preserve the dollar’s reserve currency status in several ways, compensating for economic weaknesses such as a lack of competitiveness in particular. The US appears to be addressing the growing trade deficit by maintaining the dollar as the world’s currency and matching China’s hegemony over rare earth elements. The US’s current dominance over the trade regime is largely due to dollar-based trade. The oil trade in dollars gives the US significant influence to shape geopolitics globally, both bilaterally and multilaterally, as oil holds a premier position in the international trading landscape.One commodity (oil) and one currency (the US dollar) have the power to both destabilise and stabilise the global price system. Its “as good as gold” quality can only be maintained in a world where the dominant currency is no longer associated with gold if it is associated with oil, that is, if wealthy people have faith that oil prices won’t continue to rise relative to the US dollar. The US gains influence over the oil trade by controlling the petro-dollar trade.

The globe is essentially on an “oil-dollar standard” during the post-Bretton Woods system, when currencies are meant to be “floating.” The US is under pressure to control oil sources, which it does through coercion or persuasion, to maintain wealth-holders’ faith in the value of the dollar, without which the global economy will experience severe financial turmoil, particularly given the ongoing US current account deficit. In a nutshell, war is a result of today’s necessity to preserve US financial stability. It does, however, produce a spiral effect. To control a significant oil source for financial stability, the US attacked oil-rich Iraq and, more recently, Venezuela. However, as a result of the opposition this strike provoked, oil prices skyrocketed, increasing the threat to financial stability and the temptation to wage war on other oil-rich nations like Iran. Additionally, the US would experience the same spiral consequences in a much more severe form if it decided to go to war with Iran.

The Reserve Currency and Trade Deficit “Trade-off”

Trade deficit and reserve currency operate in a trade-off scenario wherein a nation whose currency serves as the world’s reserve currency must maintain a trade deficit. It is based on two fundamental ideas. The first is the ‘policy trilemma’ or ‘impossible trinity’ thesis of economists Robert Mundell and Marcus Fleming. It contends that an economy cannot sustain unrestricted capital flow, a fixed exchange rate, and an autonomous monetary policy at the same time. The second paradox bears the name of Robert Triffin, an economist. This states that where their money works as the global reserve currency, a nation must run huge trade deficits to meet the demand for reserves. Any candidate for a new global reserve currency position must run significant current account deficits and risk an intolerable loss of economic control.

However, trade imbalances are thought to be self-correcting. A nation’s currency is predicted to lose value when it has a trade imbalance. Exports will then rise, while imports will fall, resulting in a reduction in the trade deficit. However, as the dollar is the world’s reserve currency, this idea does not apply to the US economy. A large portion of a country’s foreign exchange reserves is invested in US government securities. As a result, the dollar is overpriced. A chronic trade deficit results from higher imports and lower exports due to an overpriced dollar. Therefore, the US has a trade deficit not because it imports more goods, but rather because it supplies the world’s reserve currency.

In the face of “unfair” trade and an overpriced currency, how can the US bring manufacturing back and lower the country’s trade deficit? Enter duties on imports. Tariffs will decrease imports and increase their cost, lowering the trade imbalance. By shielding American manufacturers from import competition, they will promote domestic production. However, the US’s return to a more protectionist policy through tariffs has led to increased bilateral commerce in non-dollar currency. For instance, India-Russia oil trade and China’s increasing use of bilateral currency swaps with its trading partners have caused major concern for the US reserve currency supremacy. Moreover, it caused a spiral effect. For example, the reserve currency of the central banks has become less dollarized as a result of the recent US policy of reciprocal tariffs to safeguard trade transactions in dollars. It promotes asking about options for a reserve currency basket and the possibility of de-dollarization. Trump has made no secret about retaining the US dollar’s global supremacy, even threatening the BRICS nations with 100% additional tax should they move forward with a unified currency to “degenerate” and “destroy” the dollar. After all, de-dollarization has the potential to tip the scales against the United States and reduce its capacity to influence international financial markets and the global economy. Furthermore, to protect dollar dominance from the assault of renewable energy, the US withdrawal from India’s solar alliance must be considered.

Economists fear that tariffs go against the concept of economic efficiency. Tariffs, they warn, will imply greater expenses for American consumers, an increase in the inflation rate, and an inefficient manufacturing sector. Moreover, tariffs will encourage nations to undermine the dollar’s standing as a reserve currency by making imports more expensive. It will portend the trading of multiple currencies. Even when Trump managed the inevitability of a trade deficit because of having a reserve currency, the US was still faced with two additional problems: the increasing bilateral trade in member countries’ currencies and China’s control over modern-era gold, ‘rare earth minerals’ critical for key industries. China’s hegemony over REEs and chip production challenges the US dollar’s hegemony.

Conclusion

It reflects that the actual geo-economic strength of the US lies in the acceptability of its currency as a global reserve and its hold over one of the most traded commodities, oil. The rise of China and the evolving structure of international trade are changing the dynamics of this area, even though the US dollar continues to be the most important reserve currency. However, there wouldn’t be any surpluses to invest or deficits to finance if trade were more bilaterally balanced over time, which would lessen the demand for a reserve currency like dollars. The world looks to be headed towards a multi-currency structure for harmonious commercial ties. By encouraging alternate payment methods among trading nations and choosing the currency used for the IMF’s reserve holdings, for instance, it is necessary to end the US monopoly on currency arrangements. The structure can be extended to incorporate trading blocs, where imbalances net out amongst members when aggregated. It suggests a world with several reserve and trade currencies.

This bilateral or multilateral currency autarky might unleash the potential to trade freely as well as to obtain investment capital for emerging economies. Moreover, this strategy is embedded in the evolving industrial structure driven by economic sovereignty. Meanwhile, the US’s capacity to finance its ongoing budget and trade deficits would be impacted by the dollar’s declining value. Dollar interest rates may have to climb, and the currency may depreciate. The role of its capital markets and financial institutions would shrink. It would give more space for the formation of a multipolar currency regime.

*Shraddha Rishi teaches Political Science at Magadh University, Bodhgaya. She has obtained her PhD from the Centre for South Asian Studies, JNU, New Delhi.