Escalating tensions between the U.S. and Iran have revealed a notable shift in global investor behavior: the U.S. dollar may be losing its traditional role as a safe haven asset.
Following targeted U.S. strikes on Iranian nuclear facilities, the dollar strengthened only slightly — an underwhelming move that surprised many market participants given the heightened geopolitical risks.
Nigel Green, CEO of deVere Group, noted that this subdued reaction indicates investors are no longer defaulting to the greenback for safety. With uncertainty rising over Tehran’s potential retaliation, the shift underscores a broader reassessment of dollar-based risk hedging strategies.
“We’re witnessing a moment of reckoning for the dollar’s reputation as the ultimate safe haven,” says Nigel Green.
“The market’s restrained response, even amid a high-stakes standoff, underscores how investor faith is shifting. The world is watching Iran, but it’s also quietly reassessing the reliability of the dollar in times of crisis.”
This shift in sentiment comes after the dollar has fallen 8.6% against a basket of major currencies this year. The slide, Nigel Green explains, is partly driven by anxiety over the long-term damage from President Donald Trump’s trade tariffs, which have undermined US growth expectations and clouded policy stability, and concerns of US national debt.
“For decades, dollar dominance was a given in turbulent times,” the deVere CEO notes. “Whether during the Gulf War, the global financial crisis, or post-9/11, capital would pour into the dollar as a proxy for security. But that certainty is fading.”
In contrast, the latest flare-up in the Middle East has not sparked a stampede into the greenback. While there was an initial uptick, investors remain hesitant to commit. The tepid gains suggest the move may be a temporary, tactical reaction, not a structural vote of confidence.
“There’s a growing consensus that the US fiscal trajectory, political dysfunction, and weaponization of the dollar through sanctions carry real risks.”
Markets are now on edge for Iran’s next move. Should Tehran retaliate in a way that threatens global oil flows or draws further US escalation, the world could see significant volatility. But that volatility may not result “in the kind of dollar inflows we would have expected in the past.”
He continues: “If Iran responds forcefully and oil prices surge, we could see capital move rapidly — but not necessarily into US assets.
“Some will still run to the dollar, but fewer and more cautiously. Others will favour commodities, the eurozone, or even emerging markets seen as insulated from US-led risks.”
The rebalancing away from dollar dominance has been building for years. Nigel Green points to the aftermath of the 2008 crisis, when unprecedented quantitative easing began to undermine the dollar’s long-term value, and to more recent years where Washington’s unpredictable foreign and trade policy has alienated allies and undermined confidence.
“The world has started hedging against the dollar,” he says.
“Central banks are diversifying their reserves. Institutions are exploring alternatives. Digital currencies, including central bank digital currencies and Bitcoin, are part of the mix too.”
Still, the deVere chief executive warns against complacency. “The dollar won’t vanish as a safe haven overnight, but its gravitational pull is weakening.”
With the world awaiting Iran’s response, investors are on high alert.
“But a key subplot isn’t just about military escalation — it’s about a fundamental realignment in how global capital perceives risk and safety.
“The greenback’s mystique is fading,” Nigel Green concludes. “We’re in a new era where blind trust in the dollar no longer defines financial crises.”
