Turkey's lira grabbed the attention of currency traders Friday, skidding more than 16% against the U.S. dollar to a new historic low as fears grow that the country's financial problems could infect Europe.
Meanwhile, the U.S. dollar strengthened to its firmest level in more than a year against major rivals.
The Turkish lira slumped 16.8% versus the U.S. dollar, with the buck fetching 6.4873, compared with 5.5426 late Thursday in New York. The lira has consistently hovered around historic lows throughout the summer but has fallen more than 28% this week alone, according to FactSet.
The ICE U.S. Dollar Index which gauges the dollar against a half-dozen monetary units, surged amid the turmoil, and recently was up 0.9% at 96.348, its highest level since June 2017.
The euro the most significant component of the dollar gauge, fell sharply against the greenback, highlighting the spillover effect of Turkey’s dilemma on European markets. One dollar bought $1.1404 compared with $1.1526 late Thursday in New York, hitting a 13-month low.