(Bloomberg) -- Turkey’s lira extended its precipitous fall Monday after the nation’s president showed no signs of backing down in a standoff with the U.S.

The lira sank beyond 7.23 per dollar in early Asian hours before paring losses somewhat after the nation’s Banking Regulation and Supervision Agency stepped in to limit swap transactions on the battered currency.

The currency has been pummeled amid anxiety over Turkey’s worsening trade tensions with America, runaway inflation and one of the world’s largest current-account deficits. It has tumbled more than 40 percent this year and is the worst performer in 2018 among global currencies tracked by Bloomberg.

Bloomberg price data showed the dollar climbed as much as 13 percent to 7.2362, with reports that some banks are avoiding providing two-way prices amid unprecedented volatility. The lira was quoted at 6.8403 per dollar at 7:25 a.m. in Sydney.

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The Turkish currency has been a casualty of a deepening crisis spurred by the administration’s growth-at-all-costs agenda and a worsening spat with the U.S., which sanctioned Turkey over the detention of an American priest. The lira’s plunge and fears of a contagion sparked tremors through global markets, dragging a gauge for emerging-market currencies down on Friday by the most in more than a year.

The extended rout in the lira helped weigh on the euro and spur haven currencies higher in early Asia trading. The euro fell as much as 0.4 percent against the dollar, and as much as 1 percent versus the Swiss franc. Against the yen it slid almost 1.6 percent at one point. Liquid emerging market currencies also came under pressure with the Mexican peso and the South African rand registering drops of around 1 percent.

The sell-off also represents a vote of no-confidence in a new system of government that earlier this year handed President Recep Tayyip Erdogan unrivaled authority, essentially paralyzing the bureaucracy in Ankara. In speeches Sunday, Erdogan remained defiant, vowing never to give in on interest rates. He also ruled out an agreement with the International Monetary Fund.

“Rate hikes would not be enough, with Turkish officials needing to create a credibility shock,” Guillaume Tresca, senior emerging market strategist at Credit Agricole CIB, wrote in a Aug. 10 note. “A complete rebalancing of the economy is needed, with a new economic team and a real commitment to the central bank’s independence.”

Turkey’s central bank -- which has raised its main policy rate to 17.75 percent -- unexpectedly refrained from a further hike at its last meeting. “Turkey’s problems will continue to mount in the face of excessively loose monetary and fiscal policy,” Capital Economics senior markets economist John Higgins wrote in an Aug. 11 note.

Turkey’s government debt plummeted on Friday, driving the yield on 10-year debt to a record close of 22.11 percent. Credit default swaps tied to Turkish government bonds also moved sharply higher wider. Five-year contracts -- the cost to insure the bonds against default -- climbed 75 basis points to 453 basis points Friday evening in New York, the highest level since March 2009, CMA data showed.

--With assistance from Benjamin Purvis.

To contact the reporters on this story: Ruth Carson in Sydney at rliew6@bloomberg.net;Michael G. Wilson in Sydney at mwilson176@bloomberg.net

To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net, Dana El Baltaji, Cormac Mullen

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