TUNIS - Tunisia's dinar currency has fallen to a new record low versus the dollar, central bank data showed on Thursday, a decline that threatens to erode Tunisia's foreign currency reserves and could make debt servicing more expensive and widen the budget deficit.

The weakening dinar also further erodes the purchasing power of ordinary Tunisians.

It traded at 3.225 against the dollar on Wednesday down by 16% from a year ago, the central bank said.

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

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

(Reporting By Tarek Amara; Editing by Emelia Sithole-Matarise