Turkey looks like it's shaping up to be the August crisis for markets this year.
August always carries a bit of a risk for markets as liquidity thins and small moves can have a dramatic impact on stocks and currencies.
Last week, sterling looked like it could have been the story as the pound fell on repeated warnings of the risk of a no-deal Brexit.
But Turkey has taken over as the principal concern for markets with the lira plunging in value in recent days amid concerns about the need for economic reform and a rift in relations with the US.
Aidan Donnelly, Head of Equities with Davy, said the problem hadn't just emerged in recent days. It's been simmering for quite a while.
"Ultimately, like for many emerging market economies, the big issue is that so much debt is denominated in US dollars. That rarely ignites a major problem. It tends to be something else that sours sentiment.
"In this case, it's the detention of an American pastor by Turkish authorities. President Trump installed further tariffs and sanctions. Investors are getting spooked by this and by increased government spending promised in recent elections. They worry that if the currency gets weaker, trying to finance dollar debt will be difficult."
There are further concerns of the potential for contagion to other emerging market economies and their currencies.
"As the major global Central Banks pull back on their bond buying (quantitative easing), this has a knock on effect on emerging markets who rely on a strong flow of liquidity for financing. If the market gets worried about one of these countries, there's always the question of does it knock on and cause investor sentiment to sour in other areas," he explained.
Aidan Donnelly said we were unlikely to see contagion to the euro, despite the fact that the single currency had shown some weakness in recent days.
"There isn't much potential risk. Some of the larger European banks would have exposure. Turkey was seen as the darling of international investors for a time. Sentiment could continue for a few days but it's unlikely to have a major impact."
Turkey is by no means the only concern for investors out there at the moment.
Global trade tensions, US sanctions against Russia and Iran and the impending publication of the Italian budget have the potential to cause market shocks in the weeks ahead.
