Turkey is a 'target of economic war', Erdogan says

"You can never bring this nation in line with the language of threats", Erdogan told a crowd of supporters in Turkey.

The currency's drop - 40% so far this year - has become a gauge of fear over a country facing the fallout of years of debt-fuelled growth, worldwide concern over President Recep Tayyip Erdogan's push to amass power, and a souring in relations with allies like the US.

"We are once again facing a political, underhand plot".

The central bank has over the last weeks defied calls from markets for rate hikes to combat these problems, raising fears of interference from Mr Erdogan, who has repeatedly called for low interest rates. "What is the reason for all this storm in a tea cup?"

A war of sharp words also took place in January, when Turkey launched "Operation Olive Branch" against Kurdish fighters in Afrin.

Investors are concerned about Erdogan's economic views.

In modern economies, central banks are meant to be independent of governments to make sure they set policies that are best for the economy, not politicians.

The Turkish lira dropped as much as 18 per cent at one point after Mr Trump's announcement - the biggest one-day fall since a 2001 financial crisis in the country.

Erdogan downplayed the currency crisis in a speech on Friday, advising Turks not to be anxious over exchange rate fluctuations.

"I am specifically addressing our manufacturers: Do not rush to the banks to buy dollars".

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He added: "If there are dollars under your pillow, take these out".

Relations between the two North Atlantic Treaty Organisation allies have taken a turn for the worse amid dispute over the detention in Turkey of U.S. evangelical pastor Andrew Brunson on terrorism charges.

After Mr. Brunson had been in jail for nearly 20 months, a court in July ordered him to be moved to house arrest.

Turkish President Recep Tayyip Erdogan on Saturday warned the United States that it risked losing a "strategic partner" due to demands made by the U.S. government that Turkey release an American pastor who was arrested on terrorism charges.

The embattled lira tumbled 16 percent against the dollar on Friday, with US President Donald Trump saying he had doubled steel and aluminium tariffs on Turkey in comments that contributed to the currency's further slide.

"We will respond to those who declared trade war on the entire world and included Turkey in it, by steering towards new alliances, new markets", he said, raising questions in the future partnership between Ankara and Washington.

High level meetings in Washington between USA and Turkish officials ended this week without an apparent resolution. It has stepped up sanctions against countries such as North Korea, Iran and Russian Federation, among others.

In the first three months of 2018, Turkish steel exports to the United States fell almost 50 percent over the same period in 2017, making it the only top-10 source of US steel imports to see a decrease, according to the US Commerce Department.

President Donald Trump said he had authorised higher tariffs on imports from Turkey, imposing a 20 percent duty on aluminium and 50 percent one on steel.

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