The beleaguered currency found a moment’s respite at as it rise 2.6 percent to 6.70 against the US dollar after the Turkish central bank pledged liquidity and cut reserve requirements for banks.
But is has still lost almost 10 percent since yesterday and has shed more than two-fifths of its value so far in 2018.
So far the the contagion has hit mainly emerging markets, spreading to the South African rand and the Argentine peso.
Argentina’s central bank surprised by raising interest rates by 5 percentage points on yesterday, but it was still not enough to stop the peso hitting a record low.
Fears of exposure of European banks to Turkey pushed up bond yields in Spain and Italy and hobbled the euro.
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The single currency was last at $1.1421, having touched its lowest since July 2017 on Monday.
But Asian share markets fought to regain their footing as tremors from the collapse of the Turkish lira ebbed.
Matt Sherwood, head of investment strategy at Perpetual, said: “The more significant emerging market concern relates to the risk that regional underperformance becomes a source of disruption through swings in capital flows and currencies.
“While the focus at present is on Turkey where currency depreciation and rising rates has translated into a marked tightening of financial conditions, it could spread to Mexico, Brazil and India.”
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8:51am update: Turkish stock market rallies
Turkey’s stock market rallied this morning and was up more than 2 percent in early trading.
The initials gains mean most of yesterday’s heavy losses have been clawed back.
8.41am update: Turkish lira recovers some ground
The Turkish lira has risen by around 5 percent to take it back to 6.5 against the dollar from over 6.88 last night.
Analysts said it could mean investors are recovering their nerve but warned the lira remains in a precarious place bearing in mind it was worth 3.7 to the dollar at the start of the year.
7.45am update: Indian rupee falls to record low
India’s rupee has fallen to a record low as Turkey’s currency crisis continues to rock global emerging markets.
The rupee fell to 70.09 against the US dollar as investors fretted that the lira crisis will spread to other developing nations.
The rupee has now lost a tenth of its value so far this year.
Traders in Mumbai said the Indian central bank may have stepped in to stabilise the currency after it fell through the 70-point mark for the first time over.
7.23am update: Turkish business chiefs demand tighter monetary policy
Turkey’s business lobbies said on Tuesday that tighter monetary policy is needed to stabilise the lira and US-Turkish disputes should be solved through diplomacy.
In a joint statement, TUSIAD and TOBB Union of Chambers and Commodity Exchanges said a concrete roadmap should be prepared to permanently lower inflation.