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ANKARA, Jan. 11 (Xinhua) -- The Turkish lira fell to a historic low of 3.89 against the U.S. dollar on Wednesday following the Central Bank's liquidity boost on Tuesday amid uncertainty and chaotic situation caused by rising terror fears.
The lira hit an all-time low of 3.80 against the dollar and 4.0 against the euro on Tuesday, as the currency slumped to another record low despite the central bank's move to support the currency, private channel NTV said.
Turkey's Central Bank cut foreign exchange reserve requirement ratios for lenders on Tuesday, in a move which added 1.5 billion dollars in liquidity to the financial system, vowing additional steps if necessary.
The Turkish currency subsequently reached 3.75 against the dollar and 3.97 against the euro.
Analysts said further steps are necessary to support the struggling currency although the measure stemmed some of the lira's losses.
The drop in the lira to the dollar is the latest record low to beset the currency since the new lira was introduced in a 2005 revaluation, said the state-run Anadolu Agency.
It comes amid the greenback's continuous rise in global markets, as well as various domestic political and economic concerns, including proposed constitutional changes and terrorist threats.
Parliament initiated talks regarding the controversial constitutional amendments on Jan. 9, and Fitch may reportedly cut Turkey's credit rating in its assessment this month, putting the lira under further pressure.
With escalating domestic political and economic uncertainties, the lira lost value at the start of this week after losing around 3.2 percent last week.
The recent demand for the dollar against the lira comes amid shallow market conditions and appear to be an overly speculative move, Cemil Ertem, top advisor to President Recep Tayyip Erdogan said on Wednesday.
The speculative demand is coming from foreign markets, he said, adding that it was spurred by parliamentary debates over constitutional changes to a presidential system.
Ertem said Turkey also needs to do implement structural reforms, as this is the only way to deepen the country's financial markets and help prevent speculative measures from disrupting them.
Deputy Prime Minister Nurettin Canikli said on Tuesday that the sector will not be negatively impacted by these developments and that the government has taken all necessary measures to ensure firms will not face exchange rate troubles.
The Central Bank also said it was monitoring excessive volatility in the markets and will take the necessary measures to counter unhealthy price developments.
Plus, some economists suggested that the Central Bank should increase interest rates during the January meeting in order to control the exchange rate parity.
