The Turkish lira fell about 0.8% on Monday to a new record low of 10.075 against the US dollar, as it was hurt by concerns about another rate cut from Turkey's central bank this week.
The lira has lost more than 25% of its value since the beginning of this year, mainly due to concern about monetary policy, given President Recep Tayyip Erdogan's repeated calls for interest rate cuts and his frequent changes in central bank leadership.
The central bank is expected to cut its key interest rate to 15% this week, according to a Reuters poll, although inflation remains near 20%.
The lira's recent decline was also exacerbated by the rise of the dollar after higher-than-expected inflation data in the United States.
On the other hand, the US dollar recorded its highest level in 16 months against a basket of major currencies on Monday, supported by global growth and inflation fears, at a time when investors awaited new data this week on consumer spending in the United States.
The dollar received support last Wednesday from data showing that US consumer prices rose last month at the fastest annual pace since 1990, which casts doubt on the Federal Reserve’s belief that inflation pressures will be transient, and reinforces expectations that interest rates will rise sooner than expected in the previous.
At 17:50 GMT, the dollar index - which measures the value of the green currency against 6 competing currencies - recorded 95.405 points, its highest level since July 2020.
The euro fell to its lowest level in 16 months against the US currency.
It was traded in the latest transaction, down 0.49 at $1.1387.