Trump announced August 10 via Twitter that the United States would be doubling steel and aluminum tariffs for Turkey "as their currency, the Turkish Lira, slides rapidly against our very strong Dollar!".
Hopefully, an appreciation of the risks posed by the emerging market economies to the US economy will make USA policymakers take those economies into greater account in setting US economic policy.
"Turkish banks get loans from the foreign market and sell on the Turkish market so a huge depreciation in the lira puts their balance sheets under pressure", said Can Selcuki, general manager and partner at Istanbul Economics Research. There is no economic reason. "This is called carrying out an operation against Turkey", he told reporters on Sunday, Aug. 12.
Erdogan also has called on people to exchange their USA dollars for Turkish lira to help strengthen the exchange value of the country's currency.
"I am specifically addressing our manufacturers: Do not rush to the banks to buy dollars".
His assistant laughed, then added: "They're saying it's fashionable to have a beard, so they're going weeks without a shave, but they just don't want to spend any money".
With inflation at 15.9 percent in July, the prices of goods in shops have been steadily rising for some time and the lira's fall threatens even greater increases on basic items.
This has to be of real concern since to date, the Turkish lira has depreciated by well over 40 percent.
The Turkish stock market has also fallen 17%, while government borrowing costs have risen to 18% a year. This is due to the collapse of the lira against a strong dollar as well as inflation, which is higher than 15 percent. If anything, the drop in the lira is making us a lot more money right now, so we're not anxious about it at all!. Washington is demanding that he be fully exonerated and allowed to return to the US.More news: Looking to live in Greece? Love cats? Click here
Mr Brunson has been detained for almost two years, accused of links to the outlawed Kurdistan Workers' Party and the Gulenist movement, which Turkey blames for a failed coup in 2016. Also, a diplomatic spat with the United States is resulting in sharply higher tariffs on Turkish steel and aluminum.
What are Turkish officials doing about the lira?
Singling out the iPhone, he suggested Turks buy Samsung Electronics or locally made Venus Vestel smartphones instead. It also eased rules that govern how they manage their lira and foreign-currency liquidity, while the banking regulator limited swaps transactions to make shorting the currency more hard. That's because investors have lost confidence in management of the economy under Erdogan, who believes in unorthodox economic policy, demands low interest rates and constantly assails "the interest rate lobby".
Why is there so much fear of contagion?
Erdogan later said that Turkey was committed to a free-market economy.
Over a third of Turkish banks' lending is in foreign currencies, according to Reuters. This has raised concerns over the central bank's independence given the president's repeated statements against raising interest rates.
Enmity towards Turkey stems from the fact that Turkey has been growing fast and now stands as the world's 13th largest economic by purchasing power.