The first warning sign trouble could be afoot came when Trump said on July 26 Turkey would be facing sanctions over its holding for nearly two years of United States pastor Andrew Brunson on terror-related charges.
The Russian foreign minister claims that the USA increased use of sanctions will erode the dollar's role as the top reserve currency. "His rhetoric reflects a desire to support Turkish electronics businesses like Vestel".
The first vulnerability to which the International Monetary Fund draws attention is the large amount of Turkey's debt that is USA dollar-denominated and that is subject to valuation risk.
The Turks have exhausted the possibility of interest rate hikes and are backed into a corner by their inadequate level of currency reserves, Paul McNamara, emerging markets investment director at GAM Investments in London, said in a note. He said that Russian Federation and Turkey have set a goal to switch to national currencies in mutual trade. Turkish economy's body is solid.
The Turkish lira had seen a significant drop over the past weekend and Turkeys central bank has said its ready to take all necessary measures to ensure financial stability after the collapse.
President Trump announced Friday that he would double tariffs on steel and aluminum imports from Turkey and impose sanctions against two Turkish ministers over the detention of Andrew Bunson, an American pastor who is being tried on espionage and terror-related charges. Brunson faces a possible prison sentence of 35 years.
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.More news: Paul Pogba explains penalty row with Alexis Sanchez
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"If the United States has the iPhone, there's Samsung on the other side", Erdogan said, referring to the top South Korean smartphone maker.
"The global financial system is so interconnected that we tend to think of them as a group and financials come under pressure", said Art Hogan, chief market strategist at B. Riley FBR in NY.
"There is a cost for those who are plotting the operation" against Turkey, he said in televised remarks from Ankara, without specifying when the boycott would start or how it would be enforced. There are certain emerging market countries with relatively weak currencies and a heavy reliance on external (predominately dollar-based) financing.
The Turkish lira has nosedived in value in the past week over concerns about Erdogan's economic policies and after the USA slapped sanctions on Turkey angered by the continued detention of an American pastor.
The business groups also urged the drawing up of a roadmap to reduce inflation.
Önder wants the Turkish government to take the current financial crisis more seriously.
Turkey's President Tayyip Erdogan addresses Turkish Ambassadors during a meeting in Ankara, Turkey, Aug. 13, 2018.
After free-falling on Monday, Turkey's already troubled lira began showing signs of stabilizing on Tuesday, climbing 5 percent. It remains not far from the record low of 7.23 per dollar hit Sunday. "But the currency's decline could mean negative actual returns in yen". The country's finance minister - who is also Mr Erdogan's son-in-law - will seek to reassure around 1,000 global investors in a teleconference scheduled for Thursday.