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The ongoing crisis in Iran is worrying the whole world and ignites fears. Risk aversion may cause investors towards the US dollar, especially after the escalation in the situation this weekend.

Escalation in Iran Election Crisis

Iran’s election on June 12th had a very controversial outcome, to say the least. The authorities quickly announced Mahmoud Ahmedinajad as the winner in the first round, by a landslide victory. Severe problems on election day, and the unbelievable results, especially in the regions dominated by the opposition, sent Iranians to the streets.

These protests have dominated world news in the past week, but have been treated by many as an internal Iranian issue that would be resolved one way or another.

Stakes became much higher this weekend, when the Supreme Leader of Iran, Ayatollah Ali Khamenai spoke and threatened to crack down the protests. Opposition leader Mir Houssien Mousavi didn’t step back and said that he is ready to die for this cause.

It seems that whole Islamic Republic is struggling. Protests on Saturday became more violent, and US President also stepped up his words and said that Iran must allow freedom of speech.

Iran Election Crisis and Forex Trading

Iran is one of he world’s largest oil producing countries. It also has nuclear ambitions that threaten the world. When the regime there is in trouble, the whole world feels it. Turmoil in Iran endangers oil production and ignites fears that the extreme religious leaders will “go crazy” and take wild measures.

In times of trouble, the dollar is the safe haven currency. Risk aversion sends the dollar higher and weakens higher yielding currencies such as the Euro. Also the Yen enjoys the safe haven prestige, but not in the scale of the dollar.

So, as long as the crisis in Iran continues, and especially if it escalates, the dollar will enjoy strong back wind..

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