The Turkish lira continued to plunge against the dollar on Wednesday, putting pressure on the government of President Recep Tayyip Erdogan, who insists on cutting interest rates even as inflation soars.  

The lira shed 2% against the dollar and traded at 17.1 versus the greenback this afternoon, not far off the historic lows of more than 18 witnessed in December.  

"The pressure continues to mount on the Turkish lira," said Fawad Razaqzada, Forex.com analyst, in a note to clients. 

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"President Tayyip Erdogan has once again vowed to continue slashing interest rates despite annual inflation running at more than 70 percent," the analyst wrote, asking if the lira would still fall in the near future to 20, and adding, "Investors are also concerned that rising oil prices will just add to Turkey's inflation misery."

The Turkish president insisted on Monday that his government was opposed to higher interest rates even as inflation is soaring to its highest level in almost 25 years.  

"This government will not hike interest rates. On the contrary, it will reduce them," he said.   

Official data showed that Turkey's inflation rose in May to its highest level since 1998, reaching 73.5% on an annual basis.

The Turkish economy has become out of control since last year when President Erdogan put pressure on the central bank to start persuing the policy of low-interest rates.