The embattled Turkish lira hit record lows against the dollar on Tuesday as investors took fright over an impending trial in the United States and changes to banking regulations.

The Turkish lira lost over one percent in value to trade at 3.97 to the dollar late morning, testing the never-before-reached 4.0 ceiling, before rallying slightly to 3.95 in the early evening.

The lira is the worst-performing emerging markets currency in the world this year, losing 12.38 percent in value against the greenback since January.

The latest drop followed the delay on Monday of a scheduled trial in the United States of Turkish-Iranian gold trader Reza Zarrab and Mehmet Hakan Atilla, the deputy chief executive of Turkish lender Halkbank, accused of defying US sanctions on Iran.