The Turkish lira weakened to a new record low against the dollar on Wednesday after the central bank raised its inflation forecasts for this year and the next.
The lira <TRYTOM=D3> hit an all-time low of 8.2655 against the U.S. currency at 0908 GMT. It closed at 8.1875 on Tuesday and has weakened some 28% this year.
Turkey’s central bank raised its inflation forecast to 12.1% from 8.9% on Wednesday, saying that an expected downward trend in the second half of the year had not materialized.
The lira has recently weakened due to strains in Ankara’s ties with the United States, a row with France, a dispute between Turkey and Greece over maritime rights, and the conflict in Nagorno-Karabakh.
The central bank left its key rate at 10.25% last Thursday and raised its late liquidity window to 14.75%, saying significant tightening in financial conditions had already been achieved after steps to contain inflation risks.