The U.S. dollar rose to 3.72 against the Turkish lira on Monday, shortly after the U.S. announced that it would suspend non-immigrant visa applications for Turkish citizens.

The dollar-lira exchange rate reached 3.67 from 3.61 late Sunday, when the U.S. embassy in Ankara said all nonimmigrant visa services in its diplomatic facilities in Turkey were suspended after the arrest of one of its local employees over charges of Gülenist Terror Group (FETÖ) ties.

Parity peaked to 3.92 earlier Monday, its highest level in the seven months, later retreating back to 3.67 when markets opened in Turkey and climbing back at 3.72 later on in the day.

The lira also lost ground against the euro, sliding to 4.33 from 4.24, already a record low.

The losses in the Borsa Istanbul (BIST) 100 index also exceeded 3.5 percent, with airline shares trading on the stock market particularly affected.

The Turkish lira, as an emerging market currency, was already vulnerable to the interest rate hike expectations from the U.S. Federal Reserve (Fed) as data released last Thursday showed that orders for core capital goods in August were stronger than previously reported, suggesting that robust business spending could help offset some of the economic drag of Hurricanes Harvey and Irma.

The Central Bank of the Republic of Turkey (CBRT) Deputy Governor Murat Uysal told Reuters that the rise in the dollar could have temporary effects due to geopolitical concerns.

Uysal said there are no problems with foreign currency liquidity and foreign currency deposits in banks are at their highest level over the course of the past period.

The dollar index, which measures the dollar's value against a basket of six major currencies, last traded at 93.955. It rose to 94.016 at one point on Friday, its strongest level since Aug. 17.