Iran warns of ‘eye for an eye’ response if US carries out Trump’s threat
Iran’s Foreign Minister Abbas Araghchi said that Tehran would respond in kind to any attack on its infrastructure after US President Donald Trump threatened to bomb a bridge or power plant for every ship targeted in the Strait of Hormuz, the Guardian reported on Wednesday.
“Our defence doctrine is clear: eye for an eye. Any aggression against Iran, including our infrastructure, will compel a powerful and decisive response,” Araghchi said on X. The US threats "will have no result other than the expansion of the war," he added.
Iran’s top negotiator and parliamentary speaker, Mohammad Bagher Ghalibaf, also warned on Wednesday that if Tehran cannot export its oil, no other country in the region would be able to do so.
The Islamic Revolutionary Guard Corps (IRGC) said on Thursday that one of three oil tankers caught fire after an explosion south of the Strait of Hormuz. Iranian military added that no tanker will enter or leave the critical waterway without coordination with Iran.
On Thursday, Kuwait’s army said that it’s intercepting hostile drones, following several days of Iranian strikes on the country. Meanwhile, Iran’s semi-official Mehr reported that a location near Ahwaz was hit in a US missile strike.
Market reaction
At the time of writing, the West Texas Intermediate (WTI) is up 3.35% on the day at $87.05.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
Author
Lallalit Srijandorn
FXStreet
Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.
