ISTANBUL- Turkey's lira weakened to a new record low on Tuesday on worry about the central bank's inflation-fighting ability, and as investors braced for U.S. President Donald Trump's decision on whether to withdraw from the Iran nuclear deal.

The lira hit a low of 4.30 against the dollar, weakening from a close of 4.2646 and bringing losses this year to more than 11 percent. Snap elections called for June 24 have generated political uncertainty, adding to pressure on the lira.

"At a time when the lira has negatively decoupled, global selling pressure is also very high," said a treasury desk trader at one bank. "Trump will be watched closely. We will also watch Turkish central bank steps closely."

The central bank moved to shore up the lira on Monday, lowering the upper limit for foreign exchange which banks can use for their reserve requirements, a step withdrawing 6.4 billion lira ($1.5 billion) of liquidity and providing 2.2 billion U.S. dollars of liquidity to banks.

"While the decision has very little impact on the FX market, it shows that the central bank is getting uncomfortable with market volatility," BNP Paribas/TEB strategist Erkin Isik said.

He said the decision could also be related to the high external debt payments of banks this month, citing central data showing banks have $8 billion of external debt payment in May, against a monthly average of $4.5 billion this year.

Luis Costa, the head of CEEMEA debt and FX strategy at Citi, said the lira (TRY) was vulnerable and price moves will depend a lot on action and communication by the Turkish central bank (CBT) in the coming weeks.

"The CBT is in a hawkish tone and it might react further should TRY losses persist," he said. The central bank is scheduled to hold its next policy-setting meeting on June 7.

President Tayyip Erdogan said on Tuesday that Turkey has plans to thwart a wave of attacks on the economy through the lira, which has tumbled more than 11 percent against the dollar this year. He did not specify what the plans were.

Erdogan, a self-described "enemy of interest rates", has repeatedly called for lower borrowing costs to fuel loan growth and boost the economy. The central bank's apparent reluctance to tighten policy sharply has exacerbated concerns that it is under political pressure.

The benchmark 10-year bond yield rose to 13.97 percent, a rise of more than 100 basis points in the last four trading days.

The main BIST 100 share index dipped 0.54 percent to 100,319 points, having touched a low below 100,000 points for the first time since October in early trade.

(Reporting by Daren Butler and Nevzat Devranoglu, Editing by David Dolan and Ed Osmond) ((daren.butler@tr.com; +90-212-350 7053; Reuters Messaging: daren.butler.thomsonreuters.com@reuters.net))