Turks have over the last half decade counted the rapid depreciation of the Turkish lira on the screens outside doviz (exchange) booths with a mixture of bewilderment, alarm and ironic amusement.
The diplomatic spat sent the lira down 16% against the dollar on Friday. By noon Friday, it had fallen again, hovering around 6.15.
But Turkey is not manipulating its currency; the lira is falling because the country is suffering from an economic crisis. In the past, the country has turned to conventional solutions, such as bailout loans and economic reforms through the International Monetary Fund (IMF), which has provided tens of billions in assistance.
"In this process, we will finely work every single detail as a wide spectrum including all national and global stakeholders", he said in the first part of his speech, referring to Turkey's Medium-Term Economic Plan (OVP), which will soon be renamed. Further downside for the lira and weakness in domestic bank bonds could accelerate the withdrawal of wholesale funding in an economy which needs to attract overseas capital.
In response, President Trump tweeted in July, "The United States will impose large sanctions on Turkey for their longtime detainment of Pastor Andrew Brunson, a great Christian, family man and wonderful human being".
A financial shockwave ripped through Turkey on Friday, when its currency nosedived on concerns about its economic policies and a dispute with the USA, which President Donald Trump stoked further with a promise to double tariffs on the North Atlantic Treaty Organisation ally. Its deputy general manager was sentenced to 32 months in prison.
Geopolitical tensions between the USA and other countries set the tone for markets this week, with a speech from President Recep Erdogan doing little to quell investor angst that Turkey's crisis will spread to other economies.
"This innocent man of faith should be released immediately", Trump previously wrote on Twitter when it became clear Turkey would not release the evangelist, who was ordered to be held under house arrest. An IMF offer will come with strings attached - strings that Erdogan may find a violation of sovereignty - including demands to rein in the country's runaway inflation with higher interest rates. This has caused the decline of the Turkish lira over the last three years.
Here, the Americans might have moved too soon, not realising that in Turkey, house arrest would nearly certainly lead to dropping charges. The Trump administration doubled tariffs, exacerbating the issue. In Turkey, that was taken as an intolerable slight to which leaders could not bow. The weakened currency's value has helped increase inflation and anxious worldwide investors. But given that Turkey is in the midst of an economic crisis, it might prove an effective one.
The announcement accelerated the sell-off of Turkey's lira currency, already battered by worries about President Tayyip Erdogan's influence over the central bank.
Erdogan said Turkey does not respond to threats, and they retaliated by sanctioning some American officials to convey that.
"The price of the food that I buy increases day by day, the fuel that I put in my vehicle to distribute lunches is more expensive, but I can not raise my prices from one day to the next, " she said.
The diplomatic dispute with the USA was one of the triggers for the turmoil this week. Meanwhile, millions of Turks can do little but woefully check the latest dollar/lira parity.
"We are in uncharted waters here".
- David Barchard has worked in Turkey as a journalist, consultant and university teacher.