ISTANBUL (Reuters) - Turkey’s lira tumbled again on Wednesday and has lost nearly half the year’s gains this week alone, as the government again defended the record of former finance minister Berat Albayrak and speculation brewed over his possible return to cabinet. The currency was down 1.6% at 7.223 against the dollar at 1538 GMT after having touched 7.25, its weakest level in more than three weeks, despite a slump in the U.S. greenback. After leading emerging market peers this year, the lira has shed nearly 5% in three days. Dealers said the selloff was triggered by President Tayyip Erdogan’s defence of his son-in-law Albayrak, who abruptly resigned in November amid an economic leadership overhaul. Albayrak oversaw an unorthodox policy that sharply depleted Turkey’s FX reserves. Since his departure the central bank under new Governor Naci Agbal has hiked interest rates sharply and the lira had rallied 20%. But that fizzled when Erdogan said on Monday and again on Wednesday that the FX reserves - a country’s buffer against financial crisis - were reduced under Albayrak to help the economy through last year’s pandemic. An official from Erdogan’s AK Party said that Albayrak’s possible re-appointment as a cabinet minister had recently been discussed internally and that a final decision could be made at a party convention in coming weeks. “Some are sure that he will be appointed energy minister but Erdogan will decide. There are also those in the party that say this is not possible,” the official told Reuters. Atilla Yesilada, analyst at GlobalSource Partners, said rising U.S. bond yields and concerns that the White House could slap Turkey with more sanctions over its Russian missile defences added to the lira weakness. “Erdogan ditching or denying plans to bring back Albayrak could provide a modicum of relief to financial markets, but it is likely to be fleeting,” Yesilada said in a client note. The currency shed about half its value during Albayrak’s two years as finance minister, in which state banks sold some $130 billion in dollars in FX markets to support the lira. Last year alone, the central bank’s net FX reserves dropped by about three quarters. Agbal, the new bank chief, says they will be replenished amid more orthodox steps. Adding to the lira’s fragility, Turks hold near record levels of hard currencies as a hedge against double-digit inflation. The central bank on Wednesday raised reserve requirement ratios for lira deposits by 200 basis points in a move meant to reinforce its tight monetary policy stance. It said lira-denominated required reserves would rise by about 25 billion lira ($3.5 billion), while total required reserves in FX and gold would decrease by $500 million. Wall Street bank JPMorgan told clients late last week it was prudent to take profits on bullish lira bets given the recent rapid rise.