Turkey's currency, the lira, hit an all-time low of 3.7790 against the U.S. dollar in early trade on Tuesday, breaking previous record lows plumbed during Monday's session.
The currency, which lost 17 percent against the U.S. dollar during 2016 to claim the title of the second-worst performing emerging market (EM) currency for the year after the Argentine peso, saw its woes increase further following the publication of a critical note from credit rating agency Moody's on Monday.
The research claimed that a sharp rise in security risks in recent years was driving a deterioration in the country's economic situation and would likely cause a spike in the volume of non-performing loans held by Turkish banks.
Moody's cut its credit rating on Turkey's bonds to junk during 2016, following S&P's move earlier in the year to downgrade its rating on the country's debt further into sub-investment grade territory. This means that Fitch is the only remaining major agency to retain an investment grade rating on the country.
"I cannot find any fundamental reasons to be long, it's just as a contrarian trade because the market is really short," Thanos Vamvakidis,head of European G10 FX strategy at BofA Merrill Lynch told CNBC's "Squawk Box" on Monday morning.