The US dollar surged to a 13-month high on Friday as the Federal Reserve’s hawkish signals and escalating Middle East tensions drove investors toward safe-haven assets. The ICE dollar index climbed to its strongest level since May 2025, with money markets pricing in a likely rate hike amid renewed uncertainty over peace efforts in the region. Reports that Israel targeted Lebanon and Iran withdrew from negotiations further intensified the flight to safety, amplifying the dollar’s gains .

The Fed’s hawkish stance, which has dominated market sentiment since Thursday, continued to underpin the dollar’s strength. Analysts noted that the central bank’s signals of further rate hikes—combined with geopolitical instability—have created a potent mix for currency traders seeking stability. Gold, typically a hedge against uncertainty, sank as the dollar’s rally gained momentum .

In parallel, Türkiyes external assets rose to $406 billion in April, driven by a substantial increase in reserve holdings, according to the Turkish Central Bank. The nation’s total liabilities expanded, however, leaving its net international investment position at a deficit of $402.3 billion .

Meanwhile, Russia’s central bank warned of faster inflation risks, citing fuel shortages and the economic strain of the war. The regulator signaled caution in monetary easing, defying expectations of sharper rate cuts as inflationary pressures mount .

Asian markets echoed Wall Street’s rise, with investors betting on the Fed’s hawkish trajectory. The Nikkei 225 in Tokyo surpassed 70,000 points for the first time, gaining nearly 8% in a week—a surge analysts attributed to optimism around artificial intelligence-driven equities .

Elsewhere, Bangladesh intensified efforts to recover $230 billion in missing assets, engaging in negotiations with the UK, US, UAE, and Singapore to claw back funds lost to financial mismanagement or corruption .

The dollar’s rally, now in its second consecutive session, shows no signs of abating as investors weigh the Fed’s resolve against a backdrop of geopolitical and economic uncertainty.

Source Intelligence

8 sources5 countries

Geographic Origin5 located

3 further sources not geolocated

Political Spectrum4 mapped

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