On Friday, the euro sagged to a 13-month low against the dollar, down 0.7 per cent to $1.1450, after the Financial Times reported that the European Central Bank was anxious about possible losses at eurozone banks operating in Turkey.
Waves from the crisis spread overseas, with investors selling off shares in European banks with large exposure to the Turkish economy.
Turkey wants the USA to extradite cleric Fethullah Gulen, a Pennsylvania-based cleric who Turkish authorities say masterminded the coup attempt in which 250 people were killed.
Mr Erdogan told his followers to convert dollars and gold into lira to rescue the currency plunging to new all-time lows. Turkish President Recep Tayyip Erdogan addressed supporters Friday in the provincial city of Bayburt.
This year, it lost more than 40 per cent.
"The dollar can not block our path. Don't worry", Erdogan assured the crowd.
That is unlikely to mollify investors who are also anxious by a growing dispute with the United States. The White House said he had authorized them under Section 232 of US trade law, which allows for tariffs on national security grounds.
Erdogan is preaching calm as his country's currency collapses. But now, the relationship appears to have gone sideways.
"Confidence needs to be regained". In response, the currency renewed its sell-off.
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On Friday the currency dropped as much as 18 percent at onepoint, the biggest one-day fall since a 2001 financial crisis inTurkey.
Concerns are mounting that the decline will start to hit European banks.
Fears over contagion even pushed global equity markets lower, with some European banks coming under heavy selling pressure due to their exposure to Turkey.
Trump commented on the issue as the Turkish lira has fallen 36 percent in 2018, and the country faces increasing debt without foreign investment. It is unclear how that would justify higher tariffs on Turkey but not other countries. Erdogan has promised a new economic model driven by Albayrak, who is also his son-in-law.
"It is expected that the current account deficit would be balanced at around 4 percent", the ministry said, adding that a saving program in the public sector, which was launched this year, will continue in the medium-term. And like with the lira, investors found new reasons on Friday to dump the currency. The Turkish currency shed about 17% of its value in a single day.
"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".
"Turkey is playing a very unsafe game".
The lira "is falling so fast that a parachute is the first thing that comes to mind to prevent the lira smashing into the ground", Bart Hordijk, a market analyst at Monex Europe, told Business Insider. He has urged the central bank to not raise interest rates. The predictable result is this has made inflation get out of control - it is up to 15.9 percent when they are supposedly trying to keep it to 5 percent - because the central bank has been so slow to raise rates, and, in fact, refused to do so at its most recent meeting.
Solving Turkey's tensions with the United States would also likely go some way to quell nerves. A delegation of Turkish officials held talks with their counterparts in Washington this week but there was no sign of a breakthrough.
'However, I say it once again from here.