Investing.com - The dollar was trading near 13-month highs against a currency basket on Wednesday amid fears over contagion effects from Turkey's financial crisis, while the Turkish lira rallied after Ankara hit the U.S. with fresh tariffs.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.09% at 96.63 by 03:48 AM ET (07:48 AM GMT) after rising as high as 96.76 overnight, the most since late June, 2017.
The dollar has been boosted by weakness in the euro, which has been pressured lower by fears over the exposure of European banks to Turkey.
EUR/USD was last at 1.1333 after hitting an overnight low of 1.1317, the weakest level since July 5, 2017.
The Turkish lira strengthened against the dollar, with USD/TRY hitting an intraday low of 5.9740.
It was the first time the lira crossed back below the psychologically important 6-lira-to-the-dollar level since plunging to record lows on Monday.
The lira strengthened after Turkey imposed additional tariffs on some U.S. imports, escalating a diplomatic spat with Washington.
The country’s vice-president said the measures are in retaliation for the US government’s “deliberate attacks” on the Turkish economy in recent weeks.
Deteriorating relations between the U.S. and Ankara and worries about Turkish President Tayyip Erdogan's increasing control over monetary policy and the economy have seen the lira tumble more than 40% this year.
The drop in the lira has roiled financial markets amid fears over companies’ exposure to the Turkish currency and economy.
Against the yen, the dollar pushed higher, with USD/JPY adding on 0.17% to trade at 111.34.
The pound was trading close to 13-month lows as concerns over the growing prospect of a no-deal Brexit and economic data pointing to slowing wage growth weighed.
GBP/USD was at 1.2728 after plumbing a low of 1.2692 overnight.