ISTANBUL: The Turkish lira slid again on Wednesday, extending its losing run to a week due to underlying dollar strength and investor concerns about soaring inflation and the policies employed to deal with the country’s economic woes.

The lira weakened 1% against the U.S. currency to hit 17.2 by 0807 GMT, further erasing a rally which briefly took the currency to 16.03 on Monday last week.

It has lost 23% of its value this year, on top of a 44% slump last year which was triggered by a series of central bank interest rate cuts encouraged by President Tayyip Erdogan despite rising inflation, which neared 79% in June.

Turkish inflation seen above 78% in June, just below 70% at end-2022

Markets were also assessing the impact on energy importer Turkey of Tuesday’s near-10% slide in crude prices. Economists calculate that a $10 move in the Brent oil price amounts to a change of $4.5 billion-6 billion in Turkey’s annual energy import bill, which stood at $50 billion last year.

The high energy bill undermines the government’s aim to rein in a chronic high current account deficit and achieve a surplus. According to a Reuters poll, the deficit this year is expected to exceed $40 billion.

The lira strengthened just under two weeks ago after the latest move to underpin the currency, with the banking watchdog restricting access to lira loans for companies with substantial forex cash assets. Those gains have gradually been eroded since Tuesday last week.