The Turkish lira (TRY) on May 8 weakened to the latest in a series of all-time lows, falling to 4.3040 to the dollar at one point.

Factors at play were persistent anxiety that the central bank may not have what it takes to fight Turkey’s stubborn double-digit inflation and nervousness among investors ahead of US President Donald Trump’s decision on whether to withdraw from the Iran nuclear deal, scheduled for late in the day – the TRY has a relatively high sensitivity to rising oil prices given Turkey’s dependence on energy imports, and crude prices could indeed be set to rise if Trump’s move involves sanctions that curtail Iranian oil shipments.

On May 8, the TRY fell from 4.2646 to the dollar to its new low beyond 4.30. The previous all-time weakest rate was May 4's 4.2901. At around 18:30 Istanbul time on May 8, the currency stood at 4.2931. Its losses so far this year amount to more than 11%. Meanwhile, the benchmark 10-year bond yield moved up to 13.97%, marking a gain of more than 100 basis points in the last four trading days. The main BIST-100 share index dipped 0.54% to 100,319 points, and in early trading fell below 100,000 points for the first time since last October.

Snap elections called for June 24 have generated added uncertainty on the market.

The central bank moved to shore up the lira on May 7. It cut the upper limit for foreign exchange which banks can use for their reserve requirements, but market watchers were not convinced the move would have much impact.

"While the decision has very little impact on the FX market, it shows that the central bank is getting uncomfortable with market volatility," BNP Paribas/TEB strategist Erkin Isik told Reuters.

He said the decision could also be related to the high external debt payments of banks this month, citing central data showing banks have $8bn of external debt payment in May, against a monthly average of $4.5bn this year.