Why war is driving up the U.S. dollar.

From Marketplace, I'm Sabri Beneshore in for David Brancaccio.

Since the U.S. and Israel launched their war with Iran, the dollar has been rising.

It is up about 1% since Monday.

Before that, the dollar had actually been weakening in recent months.

Simon Harvey is here to talk about it.

He's senior macroeconomist at LB. Macro. Good morning. Good morning. Thank you for having me.

So why has the dollar's value been going up since the war started?

I mean, essentially, this is just a repatriation of U.S. kind of foreign demand back into the

U.S. because of the increase in geopolitical risk.

It's partly the reason why over the past few days we've seen US equities outperform as well.

This is just the flow of money coming back into the US because of the heightened risk profile that we're seeing.

So it's a flight to safety type thing?

More so from domestic investors that were're seeing. So it's a flight to safety type thing? More so from domestic investors that were previously invested in more lucrative, higher risk assets outside of the US,

just bringing money back. This isn't necessarily what we've seen in past risk periods,

where there is a global flight into US dollarS. dollar demand and into safe haven assets

in the U.S. ever.

So if it's U.S. investors who are kind of bringing their money home because they're a little

freaked out by having it abroad right now, does that say anything about the theory that

there's a broader reluctance worldwide to hold as many U.S. assets because the U.S. itself is seen as a little riskier these days?

Firstly, there's an issue around U.S. institutional credibility at the moment and the weaponization of U.S. assets.

And this has led to some emerging market central banks moving out of U.S. kind of asset markets and diversifying into

...