In addition, US President Donald Trump announced on Friday he would increase tariffs on Turkish steel and aluminum by up to 50 and 20 percent, respectively, at a time when Turkey's lira is at an all-time low.
World stock markets fell Friday, particularly in Europe, as investors anxious about the financial stability of Turkey, where the currency has nosedived. U.S. stocks were also rattled.
It has lost 40 percent of its value so far in 2018, and reached record lows following Trump's tweet. What possible reason could there be behind the lira, which was at 2.8 against dollar on July 15, 2016, to slide below 6 yesterday? Following the tweet, Turkey responded by imposing duties on $1.8 billion in US goods including coal and paper.
An important emerging market, Turkey borders Iran, Iraq and Syria and has been mostly pro-Western for decades.
Meanwhile, investors are anxious about the economic policies of President Recep Tayyip Erdogan, who won a new term in office in June with sweeping new powers.
The two governments have clashed over a range of issues including the Turkish detention of USA pastor Andrew Brunson on terrorism charges, the us -backing of Kurdish troops in Syria and Turkey's intention to buy Russian defense systems.
Tensions between the North Atlantic Treaty Organisation allies also flared in May 2017 after Erdoğan's personal security forces attacked demonstrators protesting his visit to the Turkish Embassy in Washington, D.C.
Lira tested an all-time low of 6.95 in value against the United States dollars, in a sign of a further economic crisis.
Erdogan reportedly was defiant, telling worshipers after Friday prayers that Turkey "will not lose the economic war".
Although he downplayed the Dollar's strength, he once again summoned God to be on the Turkish side against the US. "This is a national, domestic battle", he said.
This is a very bad rationale for hiking tariffs on a country's exports.
Turkey's president on Saturday blamed the country's economic downturn on the United States and other nations that he claims are waging "war" against his country. But invoking national security is the only way to square Trump's policy with US law and WTO rules. "We care about the law, the language of the law", he said about the U.S. policy during a rally in the Black Sea city of Ordu hit by floods that harmed hundreds of homes and businesses.
"The US and Turkey are breaking up".
Harsher US tariffs were likely to punish Turkey's already faltering steel exports to the United States. Gulen has denied the allegation.
Brunson has been detained for the past 20 months on accusations that he supported groups the Turkish government deems terrorists.
His cause resonates with Trump's Christian conservative supporters, who could be influential as Republicans seek to retain control of Congress in midterm elections in November.