The iShares MSCI Turkey ETF (NYSEArca: TUR), formerly a darling among emerging markets ETFs, has taken its lumps this year. Anti-government protests aimed at Prime Minister’s Recep Tayyip Erdogan’s regime lead to financial market calamity in Turkey.

Yields on Turkish sovereign spiked, the lira plunged and equities went along for the ride. Over the past 60 days, the once beloved TUR has tumbled 21.4%. The falling lira has Turkey burning through currency reserves and Tuesday, barley more than two months after lowered interest rates, the central bank there raised rates 75 basis points to 7.25%. It was the first rate hike in over two years. [Warning Flags for Turkey ETF]

TUR now looks like a shell of the ETF that surged 66% in 2012 and some analysts have some bearish views on the economy there. “A number of EM countries have experienced a marked worsening of their trade balances in the past two years …Another potential problem is when inflows contribute to a rapid increase in bank lending, as their reversal may trigger a credit crunch,” according to research by Capital Economics posted by Ben Levisohn at Barron’s.

Capital Economics went on to say “A country is especially vulnerable when it has a low level of foreign currency reserves…” and that Emerging Europe has “many countries that appear vulnerable on this metric.” Turkey fits the bill as an Emerging Europe nation with a strained foreign currency reserve situation.

The research firm also noted that previously strong currencies and high equity prices as signs of an emerging market’s potential vulnerability to capital outflows. Again, Turkey fits the bill on both fronts. [Protests Drag Turkey ETF Down]