economy
April 16, 2026
IMF Warning: War with Iran Could Crash the Dollar
War with Iran could cause stagflationary shocks and further raise interest rates, making it difficult for the Federal Reserve to ease monetary policy. Rogoff believes markets are too optimistic about a swift end to the conflict with Iran and anticipates further escalation of tensions.
TL;DR
- The US dollar is likely overvalued by at least 20 percent, according to Kenneth Rogoff.
- Past instances of such overvaluation have typically led to currency depreciation over several years.
- A war with Iran is described as a significant stagflationary shock that will likely increase interest rates.
- Markets are considered naive for believing the conflict with Iran is resolved.
- Investors have turned to the dollar as a safe haven amid geopolitical tensions and rising oil prices.