Why has Turkey's currency fallen so sharply?

Turkey has plan to ease market concerns, minister says, as lira plunges again

But analysts have raised concerns of a wider contagion rippling through global markets. That's because investors have lost confidence in management of the economy under Erdogan, who believes in unorthodox economic policy, demands low interest rates and constantly assails "the interest rate lobby".

On Tuesday the lira recovered some ground, trading at 6.5300 to the dollar at 1334 GMT, up around five percent on the day.

However, other countries - such as Mexico and South Africa - also took advantage of low United States interest rates in the years after the financial crisis to borrow heavily in dollars and saw their currencies coming under pressure.

Moves to ease Turkey's economic woes have failed to stop market turmoil as the country's row with the U.S. deepens.

US President Donald Trump said Friday he had doubled steel and aluminium tariffs on Turkey, which pushed the Turkish lira to new historic lows against the dollar. "With God's permission we will overcome this", Erdogan told his party members in the Black Sea city of Trabzon.

Turkish President Recep Tayyip Erdogan said on Monday the USA was seeking to "stab it in the back". President Recep Tayyip Erdogan, an opponent of interest rates who has wielded more influence over Turkey's central bank this year, continued to blame the sell-off on external forces like Washington. That helped Turkey's economy, which grew at 7 percent past year.

'We (also) have our Venus and Vestel, ' he said about homegrown Turkish electronics brands.

"If (the United States) have the iPhone, there's Samsung on the other side", he said, referring to U.S. giant Apple's iconic phone and the top South Korean brand.

His call met a mixed response on Istanbul streets.

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The US imposition of sanctions "is causing capital inflows to dry up", said economists from Capital Economics. "We will support him until the end".

On Monday, Erdogan said that spreading false news about the economy was treason and recent US actions were a stab in the back against Ankara.

He has dismissed the fall of the currency as "a storm in a tea cup" and urged Turks to sell dollars and buy lira to help boost the currency.

"If we postpone our investments, if we convert our currency to foreign exchange because there's danger, then we will have given into the enemy", he said.

Turkey's central bank on Monday announced it was ready to take "all necessary measures" to ensure financial stability after the collapse of the lira, promising to provide banks with liquidity. Be a president or whatever you want to be. On Tuesday, the Indian rupee hit a record low as a result of the economic issues in Turkey.

On Monday, Erdogan turned his attentions to social media with the announcement that Turkish authorities are investigating 346 accounts that "provoke the currency rate increase", the official news agency Anadolu reported.

A statement by the Russian foreign ministry used standard diplomatic language to talk about growing trade and common interests between the two countries.

Sergei Lavrov's attendance at the ambassadors' conference in the Turkish capital on Monday and Tuesday has been arranged far in advance.

A boycott would serve as retaliation against the U.S. sanctions on two Turkish ministers over the detention of American pastor Andrew Brunson, as well as President Donald Trump's doubling of tariffs on Turkish steel and aluminum imports last week, which resulted in a massive drop in the lira's value, according to Reuters.

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