The lira, which has lost some 40 percent of its value this year, weakened beyond 6.21 against the United States dollar after the news, from 6.04 beforehand. He has opined that higher interest rates lead to higher inflation, which is just about as bad an opinion, economically speaking, as the notion that having a trade deficit is evidence the rest of the world is playing you for a sucker.
With Turkey's economy already in a downward spiral, the president's treasury secretary, Steve Mnuchin, announced more financial pressure is on the way if Turkey doesn't release Pastor Brunson.
Trump on Thursday tweeted: "Turkey has taken advantage of the United States for many years".
Mr. Trump wrote in a tweet late Thursday: "We will pay nothing for the release of an innocent man, but we are cutting back on Turkey!" A senior USA official told CNN that in exchange for Turkey's release of Brunson, Israel agreed to release Ebru Ozkan, a 27-year-old Turkish woman held in Israel on suspicion of aiding Hamas, the Palestinian militant group that controls Gaza.
Erdogan blamed the crash of the lira on America, claiming a "political, underhand plot" had sent the value of his country's currency falling to record lows.
John Ashbourne, an analyst at Capital Economics, looks at how land reform is hitting Africa's most developed economy.
Switching to foreign currency would mean giving in to the enemy, he added.
Standard & Poor's is scheduled to release a review of Turkey's sovereign credit rating later on Friday.
President Trump is ramping his attacks up on Turkey, claiming the country has taken advantage of the USA for many years.
Turkish markets will be closed from midday on Monday for the rest of the week for the Muslim Eid al-Adha festival.
Finance Minister Berat Albayrak, the son-in-law of President Recep Tayyip Erdogan, addressed hundreds of foreign investors from the United States, Europe and Asia via a conference call in a bid to soothe the markets.
At 1612 GMT the currency TRYTOM=D3 stood at 6.0700 to the dollar, almost 5 percent weaker. But the sell-off has increased the cost of servicing that debt, particularly for companies whose revenues are exclusively in lira.
The two North Atlantic Treaty Organisation members are at odds over Turkey's detention of an American pastor, which has triggered a trade row and sent the local currency the lira into a tailspin.
Also 67% of the total debt of the government or private sector are external debt and this will strengthen the demand for dollar and foreign exchange, while government debt stands at $95 billion.
The heaviest month for repayments is October, when $3 billion in principal and $762 million interest are due.
In what could be interpreted as a sign of further tensions, the Turkish president said at a meeting with ambassadors on August 13, that Turkey is ready for war, as reported by the Turkish news service Ahval. Associated Press reporter Christopher Torchia joins Hari Sreenivasan for more. It is believed many Qatari investors could be at risk from a Turkish economic crisis.
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