Turkey’s central bank unexpectedly raised rates to buttress its wilting currency as policy makers across the developing world scrambled to stem the turmoil rattling emerging markets.

The interest rate rise helped the Turkish lira to rally against the US dollar, but elsewhere in emerging markets the turmoil continued unabated. The FTSE Emerging Markets index shed a further 1 per cent to fall to its lowest level in a month, and borrowing costs rose higher across the developing world.

The fresh uncertainty came as figures showed how waning investor appetite for emerging markets has caused debt issuance to collapse over the summer. Companies and governments in emerging markets have issued $42.4bn worth of debt since the beginning of June, compared to $95.1bn over the whole of June, July and August last year, according to Dealogic data. June was the slowest month for emerging market bond sales since December 2008.