The dollar rose against a basket of currencies to 96.92, the highest level since 27 June 2017, as the Turkish lira crisis continued, prompting markets to resort to the dollar as a safe haven.
The euro was clearly affected by the sharp drop in the Turkish lira due to concerns about European banks' exposure to Turkey, which led to increased demand for the US dollar alongside other safe haven currencies such as the Japanese yen and the Swiss franc. The euro hit its lowest level against the dollar since July last year at 1.1308.
The Turkish lira has so far lost 40 per cent of its value against the dollar since the beginning of the year, amid demands by the Turkish president to cut interest rates in light of the sharp rise in inflation as well as the strained relations with the United States. The Turkish lira has recovered over the last three days, currently trading at 6.12 after reached a historic high of 7.10 at the beginning of the week.
Also, sterling hit a 13-month low to 1.2690 after yesterday's disappointing earnings data, despite a 2.5% rise in inflation during July for the first time in the last three months.
