Turkey's lira has fallen to near record lows against the U.S. dollar, as Ankara accused Washington of having "opened a wound" with its recognition of the massacre of Ottoman Armenians as "genocide" for the first time. 

The lira had fallen in previous sessions amid concerns over the direction of central bank policy and the impact of tighter lockdown conditions, aimed at saving Turkey's summer tourist season.

On Saturday, U.S. President Joe Biden described the killing and deportation of as many as 1.5 million Armenians beginning in 1915 as a genocide, ending decades of diplomatic compromise on the issue between the two NATO members. 

In early London trading on Monday, the lira had sunk by 1.3 percent to 8.48 against the U.S. dollar, close to its previous low of 8.58, recorded last November.

The currency has lost a quarter of its value since early 2020, after investors took fright over the unorthodox economic stance of President Recep Tayyip Erdogan's ruling Justice and Development Party (AKP). 

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Analysts say the latest announcement by Washington puts further pressure on policymakers.  

"What is playing into the lira is the U.S. being ready to take a hawkish stance in terms of politics, [it] raises the fear of Turkish assets falling further," said Jakob Christensen, head of emerging market research at Danske Bank.

Biden's statement comes as the Armenian diaspora in the U.S. and around the world marked Genocide Remembrance Day at the weekend, with rallies in cities including Chicago, Los Angeles and New York. 

In response, Turkey's Foreign Minister Mevlut Cavusoglu said: "[These] statements, that have no legal binding, will have no benefit but they will harm ties."

Relations between Ankara and Washington have come under strain in recent years over a host of issues, most notably Turkey's purchase of the Russian S-400 surface-to-air missile system. 

A trial run of the weapons at Sinop on the Black Sea coast in October prompted the U.S. Senate Committee on Foreign Relations to threaten further penalties on Turkey under the Countering America's Adversaries Through Sanctions Act (CAATSA).

The lira also lost ground last week when Erdogan hinted that Turkey's central bank may once again begin selling foreign exchange reserves to support the embattled currency. 

Turkey's main opposition Republican People's Party (CHP) has endorsed a social media campaign running under the hashtag #128milyardolarnerede (Where is the $128 million dollars?), demanding to know what happened to central bank funds allegedly dispersed under the tenure of former Finance Minister Berat Albayrak, Erdogan's son in law, also aimed at propping up the lira.  

"We are asking about the money on behalf of the poor and those in need," tweeted CHP leader Kemal Kilicdaroglu, as banners and billboards on the issue were removed by police in cities, citing pandemic concerns. The fear among opposition groups is that a repeat mass sale of foreign reserves risks further depletion of the central bank's war chest.  

Meanwhile, a further four people linked to cryptocurrency trading were arrested in the southwestern city of Mugla at the weekend, accused of fraud, as Turkish authorities attempt to curb trading in alternative payment platforms. Last week, the Turkish cryptocurrency exchange Thodex, was shut down and a warrant issued for its founder, Faruk Fatih Ozer, who has reportedly fled to Albania.