The Trump administration imposed financial sanctions against two ministers of President Recep Erdogan's cabinet, a move that sent the Turkish lira plummeting. But Erdogan urged Turks not to be panicked by the currency crisis, saying: "If they have the dollar, we have Allah".
A Turkish man waits to change his USA dollars with Turkish liras inside a currency exchange shop in Ankara, Aug. 10, 2018.
"If you have dollars, euros or gold under your pillow, go to banks to exchange them for the Turkish lira". Congress is pushing for a slew of separate sanctions, including halting delivery of F-35 fighter jets and blocking funding to Turkey from the World Bank and the International Monetary Fund.
The two governments have been at odds over a wide range of topics - from diverging interests in Syria, to Turkey's ambition to buy Russian defense systems, and the case of evangelical pastor Andrew Brunson, who is on trial in Turkey on terrorism charges.
"In this process, we will finely work every single detail as a wide spectrum including all national and worldwide stakeholders", he said in the first part of his speech, referring to Turkey's Medium-Term Economic Plan (OVP), which will soon be renamed. That turned into a rout on Friday, with the currency diving as much as 18 per cent at one point, the biggest one-day drop since a 2001 financial crisis in Turkey.
Trump stated in an inflammatory tweet that the Turkish lira was weak against "our very strong dollar", adding that "US relations with Turkey are not good at this time". "Look at what we were 16 years ago and look at us now", he said.More news: Australian woman killed by garbage truck in New York City
Mr Erdogan's "tight grip" on the central bank and the fact "higher interest rates do not fit with Turkey's economic growth strategy" meant that the central bank has kept interest rates on hold, Nora Neuteboom, economist at ABN Amro, told AFP. "The dollar, the mollar, will not cut our path", said Erdogan, using a figure of speech he repeatedly uses to mock something.
Turkey wants the United States to extradite cleric Fethullah Gulen, a Pennsylvania-based cleric who Turkish authorities say masterminded the coup attempt in which 250 people were killed.
The external value of the lira is not a prime concern of Mr Erdogan's core supporters, many of whom have no plans for foreign holidays and readily accept government rhetoric that economic problems are caused by outsiders seeking to weaken Turkey.
In an opinion article published in the New York Times on Saturday, Erdogan wrote that Turkey and the US had been strategic partners and North Atlantic Treaty Organisation allies for the past six decades and that his country had repeatedly come to America's aid.
Last week the U.S. government announced sanctions against Turkey's interior and justice ministers, to which Ankara responded by freezing the assets of two American officials in Turkey.
"Aluminum will now be 20% and Steel 50%", President Trump wrote.More news: News Corp loses $1.4bn as paid subscriptions get a boost
His remarks came after US President Donald Trump's decision to raise tariffs on Turkish steel and aluminium.
"We will not lose the economic war", state-run TRT Haber TV quoted Erdogan as saying, according to Agence France-Presse.
Mr Erdogan said although the nations had been allies for decades, Turkey "now has alternatives".
"Normally, Turkey might be able to shrug off this kind of story; however, right now the Turkish economy is already in the terminal stages of a descent into crisis".
Relations between the U.S. and Turkey have not been helped by Turkey jailing an American citizen for an alleged attempted coup in 2016. "But if the United States can't handle relations with Turkey ... then a further deepening of relations with Moscow is an option".
Turkey has also been hit by United States sanctions on Iran, given that half of Turkey's oil imports come from Iran. But since adopting increased powers, Erdogan appears to have greater control over the bank as well.More news: NASA's flight to sun delayed by last-minute technical issues
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