Geopolitical tensions between the United States and other countries set the tone for markets this week, with a speech from President Recep Erdogan doing little to quell investor angst that Turkey's crisis will spread to other economies. Turkey answered the March tariff announcement by placing its own tariffs on $267 million of USA goods.
The lira's plunge has featured remarkably little on Turkish television channels and newspapers - most of which after recent ownership changes are loyal to the government - with media focusing instead on recent flooding by the Black Sea.
President Donald Trump said on Friday that he has authorised the doubling of steel and aluminium tariffs "with respect to Turkey".
Turkey said it would respond to the new USA tariff action "without delay" and warned the move would further harm relations between the two countries. Financial upheaval there risks further destabilizing an already volatile region.
Turkey's demand the United States extradite Islamic cleric Fethullah Gulen, who Ankara has said orchestrated a failed 2016 military coup against Erdogan is another sore point between the two countries.
The dollar rose as exposure to Turkey could impact European banks and spark a domino effect throughout Europe as people begin to pull out of those banks and into the USA, said Gregan Anderson, macroeconomic strategist at brokerage Bulltick LLC. The White House said he had authorized them under asection of US trade law that allows for tariffs on nationalsecurity grounds.
"Section 232 tariffs are imposed on imports from particular countries whose exports threaten to impair national security as defined in Section 232, independent of negotiations on trade or any other matter", White House deputy press secretary Lindsay Walters said in a statement.
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A club that's spent the money they've spent in the past few seasons and the players they've got [should be challenging]. He was also asked a follow-up question to clarify that there would be no incomings or outgoings throughout the day.
Analysts suggest Erdogan could have Washington in mind, given Ankara is demanding the extradition of US -based Turkish cleric Fethullah Gulen, who is blamed for masterminding the botched 2016 military takeover.
But analysts say that while there may be losses at banks, Turkey's economic problems do not pose a big threat to Europe or other big economies, like the United States.
Erdogan Friday held telephone talks with Russian President Vladimir Putin, discussing economic and trade issues as well as the Syria crisis. On Friday, he said the country had to take steps in answer "to those who have waged an economic war against us".
"If there is anyone who has dollars or gold under their pillows, they should go exchange it for liras at our banks".
On Aug. 1, the US Treasury announced it was freezing the assets of Turkey's justice and interior ministers over Brunson's continued detention.
The lira fell as low as 6.75 to the dollar, down a whopping 14 percent on the day and 41 percent since the start of the year as investors worry about the country's economic policies and a dispute with the United States that has led to sanctions and new tariffs. "This is a national, domestic battle", he told a crowd in the northeastern city of Bayburt.
US officials have said the courts would require sufficient evidence to extradite the elderly Gulen, who has denied any involvement in the coup. It is obvious how it will be done: "since the final decision-maker of all policies in the new regime is the president, the responsibility of regaining confidence is on his shoulders". Hard currency debt issued by Turkish banks suffered similar falls.
Some economists were unimpressed by the government's handling of the crisis.