Without naming countries, Erdogan said supporters of a failed military coup two years ago, which Ankara says was organized by a US -based Muslim cleric, were attacking Turkey in new ways since his re-election two months ago to a new executive presidency.
U.S. President Donald Trump said on Friday he had authorised higher tariffs on imports from Turkey, imposing a 20 percent duty on aluminium and 50 percent one on steel, as tensions rose between the two North Atlantic Treaty Organisation allies over Ankara's detention of an evangelical pastor and other diplomatic issues. Import taxes for aluminum will be 20 percent.
Addressing for the first time on Friday to a rally of his supporters, he said, "If they have dollars, we have our people, we have our right and we have Allah!"
Turkey imposed $266.5 million in tariffs against the United States in June, targeting American imports of coal, paper, walnuts, almonds, tobacco, whiskey and machinery, amongst other items.
"Those who have dollars, euros or gold under their pillows should go and exchange them into [Turkish] lira".
The lira tumbled 13% in one day, to 6.51 per U.S. dollar, a massive move for a currency that will make the Turkish poorer and further shake worldwide investors' confidence in the country.
Investors in Turkey are also anxious about President Erdogan's interference in the country's central bank.
Now, if none of that makes sense to you, don't worry: It shouldn't. Which is why Trump's tweet made it fall even further than Erdogan's reality-starved speech had already made it.
Coupled with an inflation rate of almost 16 per cent, that could cause severe damage to the local economy.
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Andrew Craig Brunson, an evangelical pastor from Black Mountain, North Carolina, arrives at his house in Izmir, Turkey, Wednesday, July 25, 2018.
Turkey's woes also shook world markets, pushing down stock indexes. High level meetings in Washington between US and Turkish officials ended this week without an apparent resolution.
It is a Coen brothers-level farce the people of Turkey and every other emerging market that's been caught up in what's now a broader currency sell-off are not laughing at.
U.S. stocks fell Friday amid the geopolitical concerns that pushed the Turkish lira to the record low against the dollar. Turkey's energy minister announced on August 8 that Turkey will keep buying liquid natural gas from Iran in violation of US sanctions. "This will be my nation's response to those who have declared an economic war", Erdogan said during the rally.
The Turkish lira fell 13 percent to 6.51 per dollar.
In June, the U.S. Senate passed a bill prohibiting Turkey from buying F-35 fighter jets because of Brunson's imprisonment and Turkey's purchase of Russia's S-400 air defense system. The Eurozone is particularly exposed - the European Central Bank is anxious about non-hedged exposure of European banks to Turkish companies and if Turkish banks fail, there's no question that it will affect markets around the world.
A combination of factors, according to experts, have led to fears the country is sliding into an economic crisis.
In the City, fund managers and investment commentators warned of the risk of capital flight from the country and flagged up the risk to European banking stocks - such as Spanish lender BBVA and Italian group UniCredit - from their exposures to Turkish lending.