Turkish Lira Rescue: Contagion fears hit markets all over the world

01:10

The lira's collapse is hitting markets around the world with fears other emerging economies could be next. Natalie Pang explains.

A sea of red for almost all markets in the world, especially in Asia.

The Nikkei dropped nearly 2 percent as Asian shares slid amid worries over Turkey.

The value of Indian rupee hits an all-time low, while the Indonesian rupiah drops to its lowest in almost three years.

Other emerging currencies that could be at risk also fell.

Yet, the sell-off is not limited to emerging markets.

The euro was also trading at a one-year low, as investors are concerned about the exposure of European banks which have big operations in Turkey.

The lira's crash has also pushed more investors into safe-haven currencies, such as yen, which increased to a six-week high.

Economists are suggesting Turkey to adopt higher interest rates to tackle the crisis.

But Erdogan has been opposing that, wanting cheap credit from banks to bring more growth.

Now the fear is that, for the long-term, if the plunge of lira would lead to a full-blown economic crisis.