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.
The United States, the world's biggest steel importer, imposed tariffs of 25 percent on steel and 10 percent on aluminum in March for imports from a variety of countries.
Turkey is world's sixth-biggest steel producer, and eighth largest steel importer for the U.S. according to the International Trade Administration.
On Friday, the Turkish currency plunged to another record low amid concerns over Erdogan's unorthodox economic policies and a diplomatic row with the United States that has led to sanctions.
"Those who have dollars, euros or gold under their pillows should go and exchange them into [Turkish] lira".
Trump's announcement had earlier pushed the Turkish lira to new historic lows against the dollar, with the currency at one point shedding nearly a quarter of its value within the day.
The president, who says a shadowy "interest rate lobby" and Western credit ratings agencies are attempting to bring down Turkey's economy, appealed to his countrymen's patriotism.
The Turkish lira fell around 16% against the U.S. dollar on the day, from $0.18 to $0.15 as of 3pm BST.
"One area we are more concerned about is contagion into the European market via the banking sector".
The U.S. decision is another salvo in the growing dispute between Turkey and the U.S.
"The situation of Turkey can not go on for much longer - I think they will have to intervene", Cristian Maggio, head of emerging markets strategy at TD Securities, adding that the intervention needed to be "drastic". President Erdogan has pressured the central bank to maintain low interest rates by refraining from implementing much-needed hikes. Turkey's exceptionally large current account deficit makes the country's potential to fall into a severe debt crisis even greater. The tech-heavy Nasdaq composite was down 83 points, or 1.1%, poised to end an eight-day winning streak. The lira remained heavily pressured against the US dollar well into Friday afternoon. It was almost 6 per dollar early Friday morning in D.C.
Emerging market currencies are ending the week with a brutal sea of red across the board, with consistent losses throughout Asia, while the South African rand and Turkish lira are leading the way with losses within the EMEA.
High-level meetings in Washington between US and Turkish officials over Brunson ended this week, apparently without a resolution.
Turkey's woes have been aggravated by investor worries about the economic policies of Erdogan, who won a new term in office in June with sweeping new powers. "Don't heed them. Don't forget, if they have their dollars, we have our people, our God", Erdogan said.
Speaking to supporters in the Black Sea province of Rize late on Thursday, Erdogan again spoke of campaigns against Turkey.
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