But on Friday, there was another distinct element that made things worse: a tweet from President Trump.
At 8.47 a.m. Eastern time — 3:47 p.m. in Turkey — Trump had turned to Twitter to announce that he would be doubling steel and aluminum sanctions on Turkey. The move came as Washington was in a diplomatic standoff with Ankara over Turkey’s detention of an evangelical pastor from North Carolina.
The detention of Andrew Brunson, who is facing trial on charges related to a failed 2016 coup in Turkey, has caused a major setback in relations between the two NATO allies. Last week, the United States implemented punitive sanctions on two members of the Turkish cabinet and warned of further measures to come.
This economic uncertainty had rattled Turkey’s already shaky economy, and the lira had dropped a number of times since the beginning of August.
On Friday, before Trump’s tweet, Erdogan had tried to stem the sell-off by appealing to Turkish citizens to exchange any dollars, euros or gold for lira to help the currency. “This is a national, domestic battle,” he told a crowd in the northeastern city of Bayburt, according to Reuters. "This will be my people’s response to those who have waged an economic war against us.”
Erdogan’s words did little to reassure investors. The price of the lira dropped significantly immediately after he spoke.
Many analysts have dismissed Erdogan’s complaints about a foreign-led “economic war” against Turkey, suggesting they were largely a scapegoat for the failings of the Turkish leader’s own economic policies.
But Trump’s tweet Friday may change that. In his Twitter message, the U.S. president noted specifically how the Turkish lira was sliding “rapidly downward against our very strong Dollar.” He added: “Our relations with Turkey are not good at this time!”
The Trump administration is no stranger to using its economic power as a political weapon to hit foreign powers. It has stepped up sanctions against countries such as North Korea, Iran and Russia, among others. In a number of countries, most notably Iran and Russia, this has caused the value of their currency to drop significantly.
At the same time, the United States is fighting an economic war against China through tariffs and other measures. Trump’s tweet Friday showed that in many cases, the political and economic factors overlap — Trump’s decision to double sanctions on Turkey was made possible by a key trade law called Section 232 that gives the U.S. president very broad powers over tariffs in cases of national security.