ISTANBUL: Turkey’s currency continued its gradual descent to record lows on Wednesday, reflecting expectations the central bank would not hike rates to stem the slide as tensions with Greece and the threat of new EU sanctions appeared to ease.

Concerns over Turkey’s depleted FX reserves and sharply negative real interest rates have left the lira among the world’s worst performers this year, down 22%.

At nearly 7.7 versus the dollar, it has shed half its value in less than three years. The decline began when a currency crisis in 2018 set off a sharp recession that put an end to several boom years under President Tayyip Erdogan.

This year’s coronavirus pandemic shrank the economy for the second time in as many years, leaving the central bank reluctant to remove monetary stimulus amid the recovery, especially given pressure from Erdogan for cheap credit.

Unlike the burst of selling in 2018, the lira in recent months has slowly burrowed to all-time lows, including passing 9 versus the euro this week. It has dropped 15 of the last 17 sessions and was at 7.684 against the dollar at 0839 GMT.

The slide continued despite a Greek-Turkish deal to resume talks over competing claims to Mediterranean waters, a dispute that has raised the prospects of harsher European Union sanctions on Ankara.