Dollar Soars on Plunging Turkish Lira and Russian Ruble

Worries over the plummeting Turkish lira and Russian ruble dragged the euro lower on Friday, rippling through riskier assets globally.  This sent the stock markets lower and buoyed safe haven assets like the US Treasuries.  The dollar benefited from the fall.

The euro dropped to its lowest since July 2017, while the dollar rallied with Washington racking up pressure on Ankara and Moscow.  The lira dropped severely, plunging more than 10 percent to its all-time rock bottom.

dollar and turkish lira bills on table

European stocks, meanwhile, appeared ready to start well in the negative territory, following the losses in Asia and US futures.

Spreadbetters set their focus on London’s FTSE, betting that it was going to open 4 points lower at 7,738.  Germany’s DAX is set to open 17 points lower at 12,660, while France’s CAC is seen to start 11 points down at 5,491.

US S&P e-minis were down 0.4 percent following slight losses on Wall Street overnight.

MSCI’s broadest index of Asia-Pacific shares excluding Japan was lower 1.1 percent, slashing its gains for the week to 0.6 percent.

The Nikkei stock index slipped 1.3 percent as the yen steadied and investors jittered over trade pressure from Washington.  This overshadowed data that showed Japan’s economy grew faster than expected during the second quarter.

In China, shares were still weighed down by worries over the worsening US-China trade conflict, with China’s Shanghai Composite index down 0.4 percent.

The ChiNext Composite index, which is filled with tech stocks, pared its early gains, though it was still 0.2 percent higher during the afternoon trade, adding to Thursday’s strong gains.

Josh Sheng, who is the chief investment officer at Shanghai Tongshengtonghui Asset Management, stated that the rally in tech shares during the latter part of the session reflected the government’s move to boost local firms, just like reinvigorating a government leadership group to focus on spurring support in homegrown technology.

“The market in China is ‘risk on’ thanks to government support policies and rising infrastructure investment.  I am optimistic about the A-share market for the rest of 2018,” he said.

The Shanghai composite has gained 1.5 percent this week, while the CSI300 is 2.1 percent higher.  Both of these indexes recorded heavy losses last week.

On the other hand, the dollar benefited from the turmoil experienced by the lira and ruble.  The greenback soared to 13-month highs.

The dollar index, which gauges the greenback’s strength against a basket of six other major currencies, broke pass the 96 level made it to the highest level since July 14, 2017.

The euro slipped 0.6 percent to $1.1456 after it fell earlier as low as $1.1436, which is a 13-month low. Against the yen, the dollar was 0.1 percent lower at 110.97.

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