A diplomatic tussle between the United States and its North Atlantic Treaty Organisation ally deepened Friday after President Donald Trump said he had authorized the doubling of tariffs on Turkish steel and aluminum.
In his tweet about the new tariffs, Trump said "Our relations with Turkey are not good at this time!"
In response, President Trump tweeted in July, "The United States will impose large sanctions on Turkey for their longtime detainment of Pastor Andrew Brunson, a great Christian, family man and wonderful human being".
The Turkish lira fell around 16% against the U.S. dollar on the day, from $0.18 to $0.15 as of 3pm BST.
Oil prices rose more than 1 percent as US sanctions against Iran looked set to tighten supply, but futures remained lower for the week as investors anxious that global trade disputes could slow economic growth and hurt demand for energy.
He urged Turkish citizens to immediately exchange their gold and dollars for lira. "This is a national, domestic battle", he said.
Without naming countries, Erdogan said supporters of a failed military coup two years ago, which Ankara says was organised by a US-based Muslim cleric, were attacking Turkey in new ways since his re-election two months ago.
Economic experts believe the sharp fall of the lira is mainly because of concerns about the government's economic policies.
President Recep Tayyip Erdogan on Thursday portrayed the currency drop as a "campaign" to harm Turkey.
Turkish newspaper Hurriyet and other media reports quote Erdogan as making the comment to a group of worshippers following traditional Muslim Friday prayers during a visit to the northern city of Bayburt.
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Turkish lira tumbles to fresh low
Trump said Friday on Twitter that he authorized a new 20 percent tariff on aluminum and 50 percent tariff on steel from Turkey . The lira fell 7% against the dollar to 5.9655 on Friday morning after hitting an all-time low earlier in the session.
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Turkey's embattled lira on Friday hit new record lows against the U.S. dollar and euro, losing over seven percent in value as strains with the United States showed no sign of abating and fears grew over the exposure of European banks.
The lira hit a record low of 6.24 per dollar on Friday, before recovering to 5.94, down 7 percent on the day.
The decline has also hit European stocks today, with the Stoxx Europe 600 falling three per cent earlier on today.
But Mr Erdogan is famously averse to interest rate rises, and there are fears he may be pressuring the central bank not to act. The central bank, officially independent, appears to have heeded Erdogan and has not raised rates when many - including the International Monetary Fund - said it should have.
On June 21, Turkey's retaliatory tariffs went into effect on 4 to 70 percent of more than $1 billion worth of USA goods.
The currency has fallen 66 per cent since the start of the year, pushing up the cost of goods for Turkish people and shaking global investors' confidence in the country.
Yet even USA firms that have disclosed relatively little exposure to Turkey fell as that country's crisis escalated Friday, with Citigroup Inc. down the most since May. Corporate foreign currency loans total about $250 billion, much of which is due to be repaid in a year.
The trouble is that for all of Albayrak's talk of Central Bank independence, Erdogan is fiercely opposed to any interest rate hikes, which are widely seen as necessary to stem the bleeding.
Washington imposed the metals tariffs on national security grounds, claiming the glut of steel and aluminum harmed U.S. companies and the economy.