020 7898 0500The euro extended losses on Wednesday against the dollar, hitting a fresh 13-month low in light of the dollar strength and fears over the European banking sector’s exposure to Turkish debt. In a bid to calm the markets, one of the members of the ECB’s banking supervisory board said investors shouldn’t “over dramatise” the risk to the European banking sector, as the ECB could always ask exposed banks to put more capital aside. This clearly did little to calm markets yesterday with one possible explanation being that Italy’s government is rumoured to be concerned about the impact of Turkish write-downs on the Italian banking system as a result of its vulnerability to a crisis.
