By Tom Westbrook
SINGAPORE, March 2 (Reuters) – The euro slid, Swiss franc rose and the dollar jumped on Monday as investors headed for safety after the U.S. and Israel bombed Iran, killing supreme leader Ayatollah Ali Khamenei to open a power vacuum and raise the risk of a protracted Mideast war.
The franc climbed about 0.2% to 0.7674 per dollar and shot 0.6% higher to its strongest level since 2015 on the euro at 0.9030 in the early hours of the Asia session.
The euro fell 0.3% to $1.1781 and the yen initially rose but was held back by Japan’s big oil imports, and last traded a fraction weaker at 156.32 to the dollar.
Sterling and the Australian dollar slid by more than 0.5% and China’s yuan fell about 0.2% in offshore trade, since China is an energy importer and the main buyer of Iranian oil.
“You don’t know how long this is going to last, how high oil is going to go, how long the Strait of Hormuz is going to be closed,” said BNZ strategist Jason Wong in Wellington.
“The initial reaction is mild risk off, and you’ve just got to take each day as it comes.”
The Israeli military said its air force killed Khamenei and his death, at 86, was confirmed by Iranian state media, setting off a high-stakes succession race.
Attacks extended into Sunday and Iran has hit back, with the Iranian Revolutionary Guard saying it had struck three U.S. and British oil tankers, while blasts were reported over Dubai and Doha.
Oil prices are markets’ initial top focus and leapt around 9% in early Monday trade on the disruption to seaborne trade.
Currencies of exporters such as Canada and Norway were steady in Asia’s early morning.
The risk-sensitive Australian dollar fell 0.7% to $0.7065, though traders thought the more durable pressure would probably fall on energy importers.
“The euro is in a difficult spot,” said Wells Fargo analysts in a note.
“Europe’s natural gas storage refill season is about to begin and the EU is heading into it with record-low gas in storage, implying it will need to buy a large chunk of energy right as prices potentially shoot higher.”
Israeli military spokesperson Lieutenant Colonel Nadav Shoshani said many targets remained, but deploying ground forces was not under consideration. U.S. President Donald Trump told the Daily Mail the campaign could run for a month.
“We figured it will be four weeks or so. It’s always been about a four-week process,” he said.
At least 150 tankers including crude oil and liquefied natural gas vessels dropped anchor in open Gulf waters beyond the Strait of Hormuz and dozens more were stationary on the other side of the chokepoint, shipping data showed on Sunday.
(Reporting by Tom Westbrook; Editing by Stephen Coates)
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