Turkey’s embattled currency appears on course to tumble further in the coming months, as external headwinds threaten to aggravate the country’s entangled economic woes.

The Turkish lira — in a fresh downward spiral since the abrupt sacking of the central bank governor in March — plunged to more than 8.5 against the dollar, its lowest level in six months, on May 13 after US inflation data turned up the pressure on the currency. Though it has regained some ground since then, the lira’s prospects remain bleak.

In a bid to prop up the lira, the central bank had hiked its policy rate by 200 basis points to 19% in March, but only a couple of days later, President Recep Tayyip Erdogan removed central bank governor Naci Agbal, who was given the post less than five months before amid government pledges of economic reform. Several rate hikes under Agbal had helped the lira rebound, but his sacking rekindled mistrust in Ankara’s economic management, sending the lira into a nosedive anew.

The price of the dollar averaged 7.62 liras in March, up from 7.02 liras in February and 8.15 in April. It rose to 8.28 liras in the first half of May and is likely to climb further by the end of the month amid the global ripples of the US inflation data and rising anticipation that the Federal Reserve might be forced to hike interest rates earlier than expected. In its biggest jump since 2008, US consumer inflation surged 4.2% in April on a 12-month basis, according to figures released last week.

Written by Mustafa Sönmez