Dollar rises as Turkish Lira sinks to record low

The U.S. dollar strengthened on Wednesday after political turmoil in Turkey sent the lira to a record low, unsettling global markets.

Turkish authorities detained President Tayyip Erdogan’s main political rival, triggering a sharp sell-off in the country's stocks and bonds.

The dollar’s rise pressured major currencies, with the euro slipping 0.4% to $1.09 and the British pound falling 0.3% to $1.29685. The Australian and New Zealand dollars also dropped by 0.5% and 0.6%, respectively.

Meanwhile, the yen weakened as the dollar climbed 0.3% to 149.74 following the Bank of Japan’s decision to keep interest rates unchanged.

Investors awaited the Federal Reserve’s policy decision later in the day, with traders expecting rates to remain steady. The dollar index edged up 0.3% to 103.39, recovering from a five-month low of 103.19 hit on Tuesday.

Geopolitical tensions added to market jitters, as Israeli airstrikes hit Gaza and diplomatic talks between U.S. President Donald Trump and Russian President Vladimir Putin failed to produce a Ukraine ceasefire. With uncertainty lingering, risk-sensitive currencies struggled to regain ground.