The Turkish lira lost over one percent in value to trade at 3.97 to the dollar late morning, testing the never-before-reached 4.0 ceiling, before rallying slightly to 3.95 in the early evening.
The currency fell as far as 3.9780 to the dollar, eclipsing a previous record low of 3.9417 set in January. Against the euro, the currency of some Turkey’s major trading partners, it touched a record low of 4.6711.
The Central Bank responded with emergency measures to tighten policy, although that failed to reverse the slide. The lira’s plunge has helped fuel inflation by driving up the cost of energy and other imports. Turkey imports almost all of its energy needs.
The Central Bank said it would remove banks’ borrowing limits on the interbank money market for overnight transactions, and increase their limit for the intraday liquidity facility -- both moves designed to shore up the currency.
The lira is the worst-performing emerging markets currency in the world this year, losing 12.38 percent in value against the greenback since January.
The latest drop followed the delay on Monday of a scheduled trial in the United States of Turkish-Iranian gold trader Reza Zarrab and Mehmet Hakan Atilla, the deputy chief executive of Turkish lender Halkbank, accused of defying U.S sanctions on Iran.
