<ul>
<li>Market pricing implies earlier tightening by central banks</li>
<li>Crude oil volatility at highest levels since pandemic</li>
<li>Investor confidence also dented by US tariff moves, private credit ructions</li>
</ul>
(Updates throughout with comments, European trading)
By Gregor Stuart Hunter and Amanda Cooper
SINGAPORE/LONDON, March 12 (Reuters) - The dollar gained for a third consecutive session on Thursday, staying close to its strongest levels this year as surging crude prices stoked inflation worries, which could potentially force central banks to reassess the need for interest-rate hikes.
The rapid increase in energy prices poses a threat to global growth, with economists warning that prolonged conflicts would further amplify the economic impact.
Unsurprisingly, the world’s biggest energy importers have seen their currencies post the largest losses against the dollar since the start of the war. The euro and the Korean won have lost 2% to 3%, while the Indian rupee (INR=) and Japanese yen (JPY=) have lost more than 1.5% each.
Meanwhile, the dollar (=USD) has risen by more than 1.5% against a basket of major currencies and is close to its highest level since November, thanks in part to its safe-haven appeal, but also because the United States is a net energy exporter.
“Those currencies which are larger net energy importers will likely weaken versus those are who are not,” Joey Chew, head of Asia FX research at HSBC in Singapore, said.
Brent crude futures (LCOc1) rose more than 10% at one point to highs of $101.59 per barrel, even after the International Energy Agency on Wednesday agreed to release a record 400 million barrels of oil from strategic stockpiles to combat the spike in crude prices.
Oil market volatility has continued to climb, with Iran saying the world should be ready for crude at $200 a barrel as its military attacked merchant ships on Wednesday, and vessel traffic through the Strait of Hormuz dwindled to a trickle.
The euro (EUR=) slipped 0.2% to $1.154, nearing its lowest level since November, while the yen (JPY=) briefly depreciated past the 159-per-dollar mark and was approaching its weakest level since July 2024.
The pound (GBP=) fell 0.2% to $1.338, a little above its weakest point of the year so far.
<h3>CENTRAL BANK RATE TRIGGER DRAWS CLOSER</h3>
U.S. President Donald Trump said on Wednesday that Washington was in “very good shape” in its war on Iran, and that the U.S. was “going to look very strongly at the Straits.”
However, three sources familiar with the matter said U.S. intelligence indicated that Iran’s leadership was still largely intact and was not at risk of collapse anytime soon, after nearly two weeks of relentless U.S. and Israeli bombardment.
Iran appeared to have set ablaze two tankers in Iraqi waters as it stepped up attacks on oil and transport facilities across the Middle East, raising the number of ships struck in the region since fighting began to at least 16.
“President Trump keeps on saying, even overnight, that the war will end soon - it’s unclear to us that it’s really up to him,” said Rodrigo Catril, a currency strategist at National Australia Bank in Sydney.
“We should expect ongoing volatility in energy prices,” he said in a podcast.
Risk appetite took a further hit after Trump’s administration on Wednesday launched a new trade investigation into excess industrial capacity in 16 major trading partners, in a move aimed at rebuilding tariff pressure after the U.S. Supreme Court struck down the centerpiece of Trump’s tariff program last month.
More tremors rippled out from the world of private credit, this time from Swiss private equity company Partners Group (PGHN.S) , which the Financial Times cited on Thursday as saying default rates in the sector could double over the next few years.
The potential for another energy-price shock prompted traders to reassess their views on interest rates. The swaps market on Thursday showed that traders expect the European Central Bank to raise rates possibly as soon as June, while the U.S. Federal Reserve could leave it until September before cutting rates, from a previous expectation for July, according to data compiled by LSEG.

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