Turkey's central bank had to take emergency measures to raise the benchmark lending rate after the lira fell more than five percent on Wednesday, reflecting growing investor alarm over President Erdogan's monetary policy.

"I think markets are beginning to take fright at the extent of government interference over certainly central bank policy. That's certainly been one of the factors which has caused the lira to lose ground. It's been a trend which has been ongoing for some time but I think the rhetoric is being cranked up now." said Commerzbank Global Financial Economist Peter Dixon.

President Erdogan who wants to keep interest rates low said last week he would seek greater control over monetary policy after the June elections.

Though the the lira recovered slightly during the day its overall value has plummeted more than 20 percent since the turn of the year, while Wednesday's sell off puts the currency on track for its worst monthly performance since the financial crisis of 2008.