Erdogan on Thursday portrayed the currency drop as a “campaign” to harm Turkey and called on the people not to worry.
“If they have their dollar, we have the people, we have Allah,” he said.
Last week, he called on Turks to convert their foreign currency and gold into Turkish lira to help the currency.
Treasury and Finance Minister Berat Albayrak — who is Erdogan’s son-in-law — was scheduled later on Friday to outline a “new economic model.”
The currency drop is particularly painful for Turkey because the country finances a lot of its economic growth with foreign investment. As the currency drops, Turkish companies and households with debt in foreign currencies see their debts expand.
Coupled with an inflation rate of nearly 16 per cent, that could cause a lot of damage to the local economy.
Foreign investors could be spooked and try to pull their money out, reinforcing the currency drop and potentially leading to financial instability.
Turkey’s woes shook world markets, pushing down stock indexes and lifting the dollar, which traders around the world typically buy in times of concern.
On Friday, the euro sagged to a 13-month low against the dollar, down 0.7 per cent to $1.1450, after the Financial Times reported that the European Central Bank was worried about possible losses at eurozone banks operating in Turkey.
But analysts say that while there may be losses at banks, Turkey’s economic problems do not pose a big threat to Europe or other big economies, like the United States.