U.S. Dollar Nears 99 Threshold as Sanctions and Buybacks Take Center Stage

The U.S. dollar has been trading near the 99 threshold, driven by recent sanctions and buyback operations.

U.S. Treasury Secretary Bessent announced an expansion of sanctions against Iran, warning countries to sever commercial ties with Iran or risk exclusion from the U.S. dollar system. This move prompted a reassessment by the market of global capital flows and demand for the U.S. dollar.

The Head of FX Strategy at National Australia Bank noted that this could be a source of reversal in the U.S. dollar's weakness, as countries may increase their holdings of U.S. dollar assets to mitigate the risk of liquidity disruptions.