Turkish lira falls to new record low against dollar

The Turkish lira hit a record low of 2.5450 against the US dollar on Wednesday, amid concerns that the central bank will continue cutting interest rates.

The lira has declined in recent days as the dollar has surged, with the Turkish currency sliding by around 0.8% against the greenback on Tuesday alone.

Official data showed that inflation in Turkey rose 7.55% in February compared to the same month in 2014, following a 7.24% year-on-year increase in January.

The lira's shaky start to 2015 reflects a nervousness on the markets over the role of Turkish President Recap Tayyip Erdogan in the central bank's monetary policy.

Erdogan has been a vocal critic of the central bank's decision to hike interest rates at the start of last year, when he was still prime minister. He has been increasingly critical of monetary policy since he assumed the presidency last summer and investors are wary over the role Erdogan could play in the economy's development.

The central bank is supposed to be an independent entity but it has come under frequent attacks from the government over its interest rate policy. The bank cut a benchmark interest rate from 8.25% to 7.5% in the first two months of the year, but the cuts were criticised by the government, who argued they did not go far enough.

President Erdogan said this week that he would phone the central bank governor Erdem Basci to warn him to "get his act together", which fuelled speculation that the governor may not see out his full term at the bank.