The relationship between the US and Turkey is not going well. Neither do things for the Turkish lira.
Greenback reaches 13-month maximum
On Wednesday, the evergreen buck rose to its highest value for over a year because a crisis in the Turkish lira, which affected emerging markets, drove demand for the US dollar as a safe-haven asset.
Indications that the American economy is still firm enough ahead of an anticipated interest rate lift by the US main financial institution in September have made the greenback dominate its rivals in recent weeks.
A dive in the Turkish lira that has impacted the common currency on worries about EU’s exposure to Turkey has powered further demand for the evergreen buck along with other safe-haven assets, including the Japanese yen and the Swiss franc.
Versus a number of its primary counterparts the evergreen buck managed to add to 96.862, which is its highest achievement since June last year.
The Turkish lira has dived over 40% versus the evergreen buck in 2018, impacted by concerns over President Tayyip Erdogan's support for lower interest rates as well as worsening ties with America.
However, on Wednesday, the Turkish currency managed to regain some ground, trading briefly at 5.7503 against the US currency, strengthening from a reading of 6.3577 yesterday.
Eventually, the rebound to below 6.0 versus the US currency was powered by a banking regular step to restrict swap transactions and also by expectations of improved EU relations.
Additionally, Turkey's finance minister is going to calm down international investors in an upcoming conference to take place on Thursday.
Financial markets worry about Turkish leader’s influence over the Turkish economy as well as his resistance to interest rates hikes to fight back double-digit inflation.
The soar in the evergreen buck backed selling in both the common currency and the UK pound.
The euro dived to $1.13 for the first time since July the previous year, while the British pound inched down below $1.27 for the first time since June 2017.
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