S&P rates Turkey at BB-, already lower than rivals Moody's and Fitch following a downgrade this month, but one of its most senior sovereign analysts, Frank Gill, told Reuters it could potentially act again if the market rout continued.
Jason Tuvey, an economist with Capital Economics in London, says that if the central bank "continues to bow to pressure from Erdogan and refrains from raising interest rates, that would lead to an even sharper fall in the currency".
"In the light of developments in the TRNC and the world, the prices of petrol and foreign exchange have risen, the Turkish lira has lost its value and although we might flatter ourselves as being able to affect that, it is impossible".
Turkey's central bank is set to meet on 7 June to discuss monetary policy, with pressure on the body to sharply increase interest rates.
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Higher rates can support a currency and ease inflation, but also hinder economic growth by making borrowing more expensive.
Turkey's currency lira has fallen to an all-time low against the USA dollar amid fears of economic instability as the country heads toward crucial elections next month. He warned that "there is no limit to how far this could go because this is becoming a currency crisis".
"It's high time to restore monetary policy credibility & regain investor confidence", Deputy Prime Minister Mehmet Simsek, Turkey's top economy official in cabinet, said on Twitter after Wednesday's central-bank meeting. We are continually organizing meetings with our ministers about the economy.
Turkey's central bank raised interest rates by 3 percentage points yesterday in a desperate move to prop up its plunging currency and calm rattled investors who are concerned about interventions from President Erdogan.
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The government is seriously considering the matter of rising oil prices and is looking to resolve the issue in the coming days. The central government levies Rs 19.48 excise duty on a litre of petrol and Rs 15.33 on diesel .
A similar measure was taken Wednesday morning by the Istanbul Stock Exchange which made a decision to convert all foreign exchange asset needs to lira "in order to fight speculative actions aimed at creating negative image of Turkey before the elections".
President Erdogan confirmed last week that he intends to take more responsibility for Turkey's monetary policy if he wins an election next month.
The situation had not been helped by Erdogan himself who has consistently pressured the central bank to keep rates down to boost growth.
The Turkish Lira has slid to a fresh historic low of 4.66 against the dollar following a statement from the credit rating agency Fitch on May 22. The side effects of the war in neighboring Syria are also to blame for adversely impacting the Turkish economy.
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Ahead of the elections, Ankara has announced a controversial package of incentives and a tax amnesty, increasing fears about overspending.