The currency weakened 1.9 per cent to a record low amid its longest streak of losses in three months, while the yield on 10 year bonds touched an all-time high.
The Turkish lira fell against the dollar for a sixth day and government bonds dropped as the rift with the US continued to weigh on investor sentiment.
The lack of liquidity in the lira market and broad dollar strength are compounding the move, according to an Istanbul-based trader who asked not to be named as they are not authorised to speak publicly.
The lira is already under pressure from one of the largest current-account deficits in emerging markets, and the risk of US President Donald Trump’s pledge to impose sanctions on Turkey is further undermining confidence.
The currency has weakened more 26 per cent against the dollar this year, hampering the ability of companies to repay their foreign-currency loans, stoking inflation and putting pressure on the central bank to keep raising rates. The bank is next scheduled to meet on Sept. 13.
The lira was 1.8 per cent weaker at 5.1720 against the dollar after earlier touching 5.1810 per greenback. The yield on 10-year government bonds jumped as much as 64 basis point to 19.83 per cent.