The dollar has hit another 13-month high against a basket of major currencies today, as safe-haven demand over fears of fallout from the Turkish lira's recent drop boosts the US currency.
The dollar's strength - overnight it also hit a 13-month high - has been bolstered by a fall for the euro, dogged by concerns over exposure of European banks to Turkey.
"In light of all the turmoil we've seen out of Turkey and the subsequent contagion into other emerging markets, the dollar is pretty much establishing itself as the safe-haven currency," said Bart Wakabayashi, Tokyo branch manager at State Street Bank.
"The dollar is the higher-yielding of the safe-haven currencies, so it obviously will attract the most flows. If you are going to park your money somewhere to stay away from the turmoil, the dollar is going to be the currency of choice," he said.
As of 5am Irish time, an index that tracks the dollar against the euro, yen and four other currencies rose 0.1% to trade as high as 96.862, its highest level since reaching 97.447 on 27 June, 2017.
"In the current environment, the appeal of currencies other than the dollar has faded quite a lot," said Kumiko Ishikawa, senior analyst at Sony Financial Holdings.
The Turkish lira started slipping again after rebounding more than 8% overnight.
The currency briefly traded about 3% weaker at 6.58 to the dollar before recouping some losses to 6.45 as of 5.23am Irish time. On Monday, it plunged to an all-time low of 7.24.
The lira has lost more than two-fifths of its value against the greenback this year, hit by worries over President Tayyip Erdogan's calls for lower interest rates and fraying ties between the United States and Turkey, a NATO ally.
Erdogan said yesterday that Ankara would boycott electronic products from the United States, retaliating in a row with Washington.
The lira is supported by remarks from Turkish Finance Minister Berat Albayrak, who told a news conference the currency will strengthen.
The euro is down about 0.2% at $1.1324, crawling back after touching a new 13-month low of $1.1319.
"Once we got into August there was quite a bit of selling (of the euro), and it accelerated with the Turkey situation," said Wakabayashi.