Why has Turkey's currency fallen so sharply?

"Everyone sees that the US dollar lost credibility", Albayrak added, referring to the rapid fall of the lira after United States President Donald Trump's decision to double tariffs on aluminum and steel on Turkey amid a deepening crisis between the two sides over the continued detention of American pastor Andrew Brunson. Behind the scenes, however, diplomats resumed contact to ease tensions.

The call for a boycott appears to be Erdogan's answer to the US decision to double tariffs on Turkish steel and aluminum imports.

Turkey's $250 billion financing need makes it all too likely that the Turkish lira will remain weak.

United States electronics like the iPhone may be banned in Turkey after the country's president declared a boycott Tuesday.

It is not clear if this comes after Mr Erdogan's pressure.

Turkish currency tumbled low over deteriorating relations with the United States as President Donald Trump unexpectedly doubled metal tariffs against the Muslim state on Friday.

Behind the scenes, however, diplomatic dialogue appears to have resumed.

The Turkish Central Bank has attempted to shore up the lira by promising to provide the necessary liquidity to banks and to maintain financial stability.

Erdogan said Turkey was facing an "economic attack" and a "bigger, deeper operation".

On August 4 Erdogan says Ankara will freeze the assets in Turkey of the U.S. ministers of "justice and interior".

World stock markets rebounded on Tuesday as Turkey's lira pulled out of a recent nosedive and reassuring data from Germany helped offset the latest wobbles in China's giant economy.

Turkey's Treasury and Finance Minister Berat Albayrak has said Ankara will continue taking steps within the rules of the free market.

But the bank did not increase interest rates, which would help contain inflation while supporting the lira. Turkey refused to release an American pastor who has been in detention in Turkey for almost two years now.

The drop is down to a flawless storm of fresh U.S. sanctions against the country, economic conditions in Turkey, and a strong dollar that is pulling foreign investment out of Turkey and back to the United States.

More than a third of Turkish banks' lending is in foreign currencies, according to Reuters.

Independent economists caution it would be hard to unseat the dollar as the top reserve currency as it is used widely in the global economy, for example to trade in oil and for commercial deals.

Separately, Russian Foreign Minister Sergey Lavrov, on an official visit to Ankara, said the increased U.S. tariffs and sanctions imposed by Washington are "based on the desire to dominate everywhere in everything, to control worldwide affairs and to achieve unilateral advantages on global markets. Meanwhile, the Kurds remain a reality near and within Turkey's borders; a deepening economic crisis makes it increasingly vulnerable; and its erratic regional policy makes it hard to pursue any dialogue that requires trust and steadfastness".

He has portrayed its depreciation as an "attack on our country" and on Tuesday announced a boycott of U.S. electronic goods. He renewed a call on Turkish citizens to convert their dollars into the local currency.

The prosecutor's office has vowed to take action against all news, media and social community that it believes is undermining Turkish assets.

He said: "They have done this before".

In Istanbul, 35-year-old Sukru Gumus, one of millions of Turks grappling with the country's economic crisis, said the crisis was raising costs for his business.

  • Anthony Vega