A Kuwaiti man holds a one US dollar bill next to a five Turkish lira banknote at a currency exchange

"The fluctuation in the Turkish Lira is a plot against Turkey, but the Turkish people will not give in", the Turkish president defiantly said on Sunday in a live speech in northwestern province of Trabzon, sharply criticizing the United States of waging an "economic war" against his country. "The biggest EM risk, it's still ahead of us".

The sanctions caused market turmoil, which the central bank attempted - but failed - to soothe with a series of market-boosting measures.

"You act on one side as a strategic partner but on the other you fire bullets into the foot of your strategic partner", Erdogan told a conference in the capital Ankara.

Saying that the USA is going through a "strategic confusion" due to its domestic politics, Cavusoglu called its North Atlantic Treaty Organisation ally to realise "each of us matters".

As the crisis deepened at the end of last week, the lira (the Turkish dollar) and the Turkish stock market slid sharply.

"Turkey is under siege in the economy, as in other areas", Erdogan said.


Relations between North Atlantic Treaty Organisation allies Turkey and the United States are at a low point, hurt by a series of issues from diverging interests in Syria, Ankara's plan to buy Russian defence systems and the detention of an American pastor, Andrew Brunson.

Turkey has held Christian pastor Andrew Brunson in custody for almost two years on espionage and terrorism charges tied to an attempted coup of Erdogan in 2016.

"And we also have our Venus and Vestel", he said, with regards to Turkey's own domestic brands. The US has refused to extradite Fethullah Gulen, who lives in Pennsylvania.

In addition, Erdogan also threatened the United States to "start looking for new friend and allies", if the row isn't resolved soon.

What is happening to the lira?

'We will boycott United States electronic goods, ' Erdogan said in a televised speech, raising the stakes in a spat that has seen the Turkish lira plunge to record lows.


Since January, the Turkish lira has lost more than 34% of its value against the dollar, pushing up the price of everyday items. By size, Turkey is America's 32nd-largest trading partner, and US banks have little invested in Turkey, making up less than one percent of all foreign lending. Exposure to Turkey has seen shares in Spain's BBVA lose more than 3 percent Monday, along with shares in Dutch bank ING and Italian UniCredit.

Markets were also somewhat soothed by Turkey's central bank loosening cash buffer requirements for the country's banks and its finance minister setting up a call with investors.

Investors were encouraged that US declines were only minor overnight after the losses by the lira and other emerging-market currencies. Japan's Nikkei lost 2.0 percent with every bourse in the region in the red.

What are Turkish officials doing about the lira?

Argentina's central bank unexpectedly raised interest rates by 5 percentage points on Monday.

It is not clear if this comes after Mr Erdogan's pressure. Instead of taking drastic action to shore up confidence, such as raising interest rates or going to the International Monetary Fund (IMF), the government is couching itself in nationalistic rhetoric of sacrifice.

In a televised speech on Friday, he called on Turkish citizens to exchange foreign currency and gold for lira, calling it an "economic war".


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