Oil prices are plunging and currency markets are reversing direction after US President Donald Trump said he would “suspend the bombing and attack of Iran for a period of two weeks,” “subject to the Islamic Republic of Iran agreeing to the COMPLETE, IMMEDIATE, and SAFE OPENING of the Strait of Hormuz”.

“A whole civilization will die tonight, never to be brought back again. I don’t want that to happen, but it probably will,” Trump wrote earlier today, before Pakistan’s prime minister suggested that the two sides agree to a two-week ceasefire*, with Iran permitting traffic to flow through the Strait as a “goodwill gesture” . “We received a 10-point proposal from Iran, and believe it is a workable basis on which to negotiate,” Trump said, “A two week period will allow the Agreement to be finalized and consummated.”

For foreign exchange markets, the news will provide short-term relief to currencies that have been battered by the conflict’s disruption of global energy flows. The partial reopening of the Strait, through which roughly a fifth of the world’s oil and gas passes, should ease pressure on net-importer currencies such as the Japanese yen, Indian rupee, and euro that have weakened amid soaring energy costs, while reducing demand for safe havens like the US dollar and Swiss franc.

Market participants should, however, expect volatility to remain elevated across most major pairs until it becomes clear that the agreement will hold. Background reports suggest the three sides—the US, Iran, and Israel—remain far apart on key negotiating points, and further escalation is still possible. Beyond the near term, Iran’s ruling regime has (arguably) solidified its political control, and has demonstrated its capacity for bringing global oil and gas markets to their knees, suggesting that a structural risk discount in energy-sensitive currencies may persist well beyond any deal.

*There’s some evidence to indicate that the suggestion originated in the White House, not in Pakistan. But with tit-for-tat attacks set to pause and the Strait likely to reopen, markets are more than willing to ignore this point of order.