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Euro whacked as Turkey sell-off boosts dollar

Friday,   10-Aug-2018   03:53 PM (IST)

The euro sank to its lowest levels in over a year on Friday after a report that the European Central Bank is growing concerned about exposure of banks to Turkey. The ECB has concerns about banks in Spain, Italy and France and their exposure to Turkey’s woes, the Financial Times reported on Friday, citing two sources. Traders said that had pulled the euro down against the dollar and other currencies including the Swiss franc. The euro fell 0.6 percent to $1.1431, its weakest since July 2017. Against the yen, the euro slid one percent to 126.79 yen, a two-month low. The euro is down almost 1 percent for the week, partly because of investor concerns that Italy is heading for a costly and unsustainable spending spree. A sharp rise in the dollar added to the single currency’s woes as investors rushed to safe-haven assets worried by global trade and political tensions. The dollar jumped to a 13-month high against a basket of currencies and the Japanese yen also appeared to benefit from an uptick in geopolitical tensions, including the U.S.-China trade war and Brexit. Trade tensions are seen as beneficial for the dollar as the economy is better placed to handle protectionism than emerging markets, and tariffs may narrow the U.S. trade deficit.