A Turkish central bank intervention failed to prevent the lira from tumbling to a new a low against the US dollar of 3.92 on Monday. Local-currency bond yields also rose to a record, despite the announcement over the weekend that the central bank would open forward options to help corporate borrowers manage their foreign exchange position.

Turkey’s threat last week to “investigate” US prosecutors who have pressed money-laundering charges against associates of Turkey’s President Erdogan was extraordinary, even for Turkey’s colorful leader. Erdogan’s deputy prime minister Bekir Bozdag said over the weekend, “The case is political, lacks any legal basis and is a conspiracy against Turkey.”

Erdogan’s attack on the central bank for raising interest rates didn’t help the currency, either. More than half of Turkish corporate debt is denominated in US dollars or euros, with an outstanding foreign debt volume of about $300 billion, according to the central bank. Some Turkish companies have foreign-exchange revenues to match against costlier dollar debt service, but many do not, and the fall in the lira threatens the solvency of many local debtors.

Asia Times Financial is now live. Linking accurate news, insightful analysis and local knowledge with the ATF China Bond 50 Index, the world's first benchmark cross sector Chinese Bond Indices. Read ATF now.