TUNIS - Tunisia’s dinar currency has fallen to a record low versus the dollar, central bank data showed on Thursday, a decline that threatens to erode Tunisia’s foreign currency reserves and will increase inflationary pressures.

Tunisia’s annual inflation rate rose to 8.6% in August, the highest level in nearly three decades.

The dinar traded at 3.309 against the dollar on Wednesday down by 17.5% from a year ago, the central bank said.

The decline will also make debt servicing more expensive and widen the budget deficit.

In May the dinar changed hands at 3.101 per dollar for the first time, driven down by high inflation, a worsening trade deficit and the severe impact of the Ukraine crisis on public finances.

(Reporting by Tarek Amara; Editing by Toby Chopra)