Dollar Weakens as Iran Offers to Reopen Hormuz

The US dollar took a hit on Tuesday (Sep 22) after Iran's proposal to reopen the Strait of Hormuz within seven days if the US eases military pressure sent oil prices lower. The disruption in the strait has strained global oil supplies and added to inflationary pressures, prompting investors to reprice assets at the slightest hint of a shift in outlook.

Brent crude futures dropped below $99, while the dollar index fell 0.02% to 100.4, its lowest since late July. The US currency weakened against several major peers, including the yen and euro, but held steady against the pound.

Traders are also weighing whether the Bank of Japan (BOJ) will raise rates quickly enough to close the gap with global peers. Despite the BOJ's rate hike on Sep 18, the Japanese currency has been under pressure due to dissent from two policymakers who pushed for a more cautious pace.