Turkey plunges into turmoil again

Market Reactions to the Iran Conflict: A Different Story

Just over a month ago, as tensions with Iran escalated into conflict, I began analyzing how financial markets might respond, drawing comparisons to the aftermath of Russia’s 2022 invasion of Ukraine. At that time, oil prices surged amid concerns over potential sanctions on Russian exports, which boosted the currencies of nations reliant on oil and other commodities, while putting pressure on those dependent on imports. The Brazilian Real experienced significant gains, whereas the Turkish Lira suffered notable losses.

This time, however, market dynamics have unfolded quite differently. In fact, the trends have largely reversed compared to the previous crisis. The chart above illustrates the shifts in various asset prices from February 27 onward.