Currencies Overview: Dollar Near Its Highest Level in 4 Months And Turkish Lira Falling

The dollar has consolidated near its highest level in 4 months after Turkish President Recep Tayyip Erdogan surprised investors over the weekend by changing the central bank governor, which adopts policies that tend to tighten monetary, which led to turmoil in currency markets globally.

The lira fell about 15%, near an all-time low, and bond yields rose after Turkey’s decision, fearing to back down from raising interest rates and undermining the bank’s credibility.

Turkey’s move came against the backdrop of growing investor expectations for the rise of the dollar in the short term, in the wake of the rise in US Treasury revenues, which enhances the attractiveness of the dollar as a safe haven.

Against a basket of competing currencies, the dollar generally settled at 92.022, near its 4-month high of 92.50, which it reached this month.

The dollar was also supported by concerns that events in Turkey might affect other currencies.

The Turkish lira was at 7.9600 against the dollar, down about ten% from Friday’s closing level. It earlier fell 14.9% to 8.4850 against the dollar, near a record low of 8.5800.

The euro fell slightly to $1.1892.

Reduced risk appetite pushed the Australian dollar down 0.3% to $0.7724. Its New Zealand counterpart fell 0.1% to $0.7158.