"The lira is looking extremely vulnerable right now, throwing the challenges faced by Turkey's central bank - which has its own credibility problems - into sharp relief. The central bank can no longer point the finger at the Fed. This is a central bank which stubbornly refuses to mount an interest rate defense of the lira, making Turkish assets even more vulnerable," added Spiro.
(Read more: Turkish Finance Minister: Protests a 'Hiccup' for Economy)
Earlier this week Turkey's central bank attempted to boost its domestic currency by selling at least $6 billion in foreign currency by the end of January. The move did provide some respite, lifting the lira to 2.0580 on Wednesday, before it was knocked back down by the renewed political uncertainty.
Chris Weston, currency strategist at IG's Sydney desk, agreed that a combination of factors were putting downward pressure on the lira at present.
"The fundamentals are poor without this saga going on anyway. In the emerging market space Turkey's got one of the widest current account deficits. Some emerging markets have done well to address bond outflows, but these guys haven't done anywhere near as much as India for example," he said.
(Read ,ore: Some fund managers turn positive on emerging markets)
Weston added that although the Turkish central bank has been taking steps to stabilize the lira, in reality the moves may not be sufficient, particularly given the country's external financing requirements next year at $215 billion, which far outweigh its $42 billion of FX reserves.
"Currency intervention halts the slide and can create short covering but it's not going to be enough to warrant taking a long-term position on the lira. So you have the government doing one thing and the central bank basically having to try and undo all the negative work. It's a recipe for further weakness, even though a lot has already been priced in," he said.
— By CNBC's Katie Holliday: Follow her on Twitter @hollidaykatie