Argentina has hiked interest rates to 60% as it takes dramatic steps to restore confidence in its plunging currency,in the latest sign of turmoil among emerging market economies this year.

The Argentine central bank raised the cost of borrowing by 15 percentage points on Thursday in an attempt to shore up the peso, which has plummeted in value. The central bank said it would keep rates unchanged at 60% until at least December.

The peso dropped amid intense trading on foreign exchanges, falling by more than 10%, despite the bank’s rate move, in the most severe drop for the currency since it was floated in 2015. $1 (77p) is now worth about more than 39 pesos, having been worth about 18 pesos at the start of the year.

Paul Greer of the City fund manager Fidelity said countries across emerging markets were being targeted by investors due to their economic problems, including high levels of debt and imports. “There are no easy answers for Argentina to its current woes,” he said.

Elsewhere on Thursday, the Turkish lira fell by more than 4% against the dollar amid increasing concerns over economic crises in developing nations. So far this year the Indian rupee and the South African rand have also come under pressure as concerns grow that the countries will struggle to pay their dollar-denominated debts following a rise in US interest rates. The rand fell a further 3% against the dollar on Thursday.

With Recep Tayyip Erdoğan, the Turkish president, under pressure from US sanctions imposed by Donald Trump in a dispute over an imprisoned American pastor, the lira has already seen a depreciation of about 40% against the dollar this year.

Financial markets around the world sold off on Thursday as fears over the fallout from the crises unfolded, while there are also concerns over the impact of the White House’s various trade disputes around the world. The FTSE 100 closed down 0.7% while on Wall Street the Dow closed down 0.5%.

The latest developments come as the US dollar gathers strength this year with the Federal Reserve raising interest rates, reminiscent of the early 1990s when tighter monetary policy under the former Fed chair Alan Greenspan triggered a series of crises across the developing world.

Although the problems stem from Washington, there have been concerns the fallout could infect markets around the world, with Argentina and Turkey in the eye of the storm.

Having approached the International Monetary Fund for emergency support amid an unfolding economic crisis, Argentina asked the Washington-based lender of last resort earlier this week to accelerate the release of the money to bolster its finances.

Argentina’s president, Mauricio Macri, has said a lack of trust from the markets had forced him to ask for help as the peso weakens and inflation runs at 30%.

The country has asked to borrow $50bn from the IMF to restore confidence in its finances amid high levels of government debt in dollars, which have become more expensive to pay off as the dollar strengthens. While the move was designed to soothe investor concerns, the effect has been the opposite in the financial markets, triggering concerns about the country’s ability to pay its debts.

Despite the massive increase for interest rates to 60% – by comparison the cost of borrowing is as low as 0.75% in the UK – economists said Argentina may still require further government action to bring the crisis under control.

Edward Glossop of the research consultancy Capital Economics said Buenos Aires would need to give more details about how it planned to meet the targets for tax and spending set by the IMF. Latin America’s third biggest economy is forecast to shrink this year, while borrowing has become harder for firms in the country amid higher interest rates.

“Maintaining investor confidence from here will require help from the government, which has been largely unconvincing over the past few weeks,” Glossop said.