(Bloomberg) -- There’s a “real possibility” Turkey will impose capital controls to stem the plunge in the lira, which would be bad for the whole developing-nation asset class, said veteran emerging-markets investor Mark Mobius.

“If Turkey is forced to close the foreign-exchange window so that foreign investors cannot get out, that will be a very, very bad example for other emerging markets," Mobius said in a Bloomberg TV interview with Rishaad Salamat and Haidi Lun. “As you know in the past during the Asian crisis, Malaysia did that and it was was very, very bad news.”

While some investors are starting to weigh the possibility, the Turkish government has said repeatedly it won’t limit the flow of foreign money in and out of the economy. President Recep Tayyip Erdogan said over the weekend that the country wouldn’t raise interest rates or accept an international bailout.

Read here what other investors are saying about capital controls in TurkeyRead more: Turkey Takes First Steps to Bolster Banks Amid Lira Decline

Mobius, who left Franklin Templeton Investments earlier this year to set up Mobius Capital Partners LLP, said he was “deeply concerned” by the standoff between the U.S. and Turkey over Ankara’s detention of American pastor Andrew Brunson. The tension between the two nations, coupled with concern over Turkey’s current-account deficit and runaway inflation, dragged the lira down by about 30 percent this month.

White House National Security Adviser John Bolton said Monday that there was nothing further to negotiate until Brunson is freed, according to two people familiar with the matter.

While the current turmoil in emerging markets is creating opportunities -- in Brazilian consumer stocks, for example -- investors need to be careful, Mobius said. Further declines in China’s yuan are also likely if the trade war with the U.S. continues, he said.

--With assistance from Rishaad Salamat, Haidi Lun and Dana El Baltaji.

To contact the reporter on this story: Abhishek Vishnoi in Singapore at avishnoi4@bloomberg.net

To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, ;Tomoko Yamazaki at tyamazaki@bloomberg.net, Andrew Janes

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