Markets kept their cool on Monday amid a fast-moving and volatile geopolitical landscape in the Middle East — but the longer-term risk premium has likely risen, while oil prices remain on edge, analysts said.
Iran said it was acting in self-defense in response to a strike on its diplomatic compound in Damascus, Syria, earlier this month.
By Monday, global players including the U.S. and European leaders were seeking to cool tensions, urging Israel to show restraint in its response.
Sinha nevertheless added that "the fact that we moved from a proxy confrontation to a direct confrontation, even though that de-escalates in the near term, the longer term risk premium probably goes up."
"I think the FX market ultimately will take its cue from oil prices because ultimately, that's the channel through which it spills over to the FX market," he said.
Persons:
Adarsh Sinha, CNBC's, Sinha
Organizations:
U.S . Energy Information Administration, U.S, Asia FX, Bank of America, Iranian, FX
Locations:
Iran, Israel, Damascus, Syria, Strait, Hormuz, Tehran, Asia, U.S