The dollar advanced to a 13-month peak on Tuesday against a basket of major currencies as traders increased their safe-haven holdings of the U.S. currency on worries about the fallout from the Turkish lira’s recent fall.
While the lira rebounded from an all-time low, concerns about European banks’ exposure to the country spurred selling of the euro, sending it to thirteen month lows against the greenback and Swiss franc.
An index that tracks the dollar against the euro, yen, sterling and three other currencies touched 96.794, the highest since June 2017. It was last up 0.4 percent at 96.762.
The Turkish lira has lost more than 40 percent of its value against the dollar this year, hit by worries over President Tayyip Erdogan’s calls for lower interest rates and fraying ties between the United States and Turkey.
Sanctions imposed by Washington on Ankara have stoked anxiety about Turkey’s economy, already bogged down by double-digit inflation.
The currency was supported by remarks from Turkish finance minister, who told a news conference the lira will strengthen.
Senior currency traders stated that we are just getting a bit of reprieve from the recent down move.”
Concerns have lingered about European banks’ loans to Turkey, stoking selling of regional stocks and the single currency.