NEW YORK (Reuters) - The dollar climbed to its highest level in over 13 months against a basket of currencies on Wednesday as investors stepped up their safe-haven holdings of the greenback due to worries about slowing Chinese growth and Europe’s exposure to Turkey.
The euro slid to its weakest level in over a year on anxiety about the exposure of the continent’s bank system to Turkey. The Turkish lira sank to a record low earlier this week, prompted by concerns over President Tayyip Erdogan’s economic policies and diplomatic and trade disputes with the United States, a NATO ally.
“It’s more of a strong dollar story today,” said Ilya Gofshteyn, FX and global macro strategist at Standard Chartered Bank in New York.
The greenback was also underpinned by upbeat figures on domestic retail sales, manufacturing output and worker productivity, supporting the view of steady U.S. economic growth.
At 10:48 a.m. (1437 GMT), an index that tracks the dollar against six major currencies .DXY was up 0.16 percent at 96.885 after hitting 96.984 earlier, the highest since June 2017.
The euro fell to $1.13010 EUR=EBS, the lowest in 13 months. It was last down 0.2 percent at $1.13225.
Sterling GBP=D3 reached a 13-1/2 month low versus the dollar despite data showing Britain's inflation rate picked up in July for the first time this year. It was down 0.4 percent at $1.2673.
The Chinese yuan CNH=EBS sagged nearly 0.8 percent to 6.9467 per dollar in offshore trading, hitting its weakest level since January 2017.
The yuan’s latest weakness followed a batch of disappointing economic data earlier this week. That stoked speculation whether the People’s Bank of China would intervene or Beijing would introduce more fiscal stimulus to stem its currency from breaking through the 7-yuan mark.
“There’s some talk of some stimulus, but we don’t know what it would look like,” Gofshteyn said.
The Turkish lira rose for a second day on central bank liquidity measures, while other emerging market currencies stumbled again, with the South African rand ZAR=D3hitting a 13-month trough and the Indian rupee INR= lingering near an all-time low.
Turkey on Wednesday doubled tariffs on some U.S. imports, including alcohol, cars and tobacco in retaliation for U.S. moves.
The lira TRYTOM=D3 has recovered 12 percent to 6.06 per dollar after hitting a record low of 7.24 on Monday. It was still 40 percent lower versus the greenback this year.
Additional reporting by Tom Finn, Sujata Rao in LONDON; Editing by Richard Balmforth and Dan Grebler
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