Turkey's Erdogan says lira weakness a plot, can not be explained by logic

The lira went into free-fall sinking more than 10 percent

"Interest rates are an exploitation tool that makes the rich richer and the poor poorer", Mr. Erdogan said. "We've stood with neighbors before, and will again now", he warned.

The new tariff threat targeting Ankara comes as bilateral tensions have risen over the detention and trial in Turkey of USA pastor Andrew Brunson, 50.

Washington earlier this month already imposed sanctions on senior Turkish officials over the Brunson case, angering Erdogan and prompting retaliatory measures by Ankara.

"Failure to reverse this trend of unilateralism and disrespect", he added, "will require us to start looking for new friends and allies".

Turkey's President Tayyip Erdogan addresses his supporters in Bayburt, Turkey, on August 10, 2018.

The lira tumbled 14 percent in one day, to 6.51 a dollar, a massive move for a currency that will make the Turkish poorer and further erode global investors' confidence in the country.

The U.S.is the biggest importer of Turkish steel, and on Friday President Donald Trump said he will authorize higher tariffs on steel and aluminum from Turkey, a North Atlantic Treaty Organisation ally.

"We will say bye bye to those, who sacrifice their strategic partnership and alliance with a country of 81 million people on the altar of their relations with terror organizations", he said.

"We are never accepting this order which declared economic war to the entire world and which held countries to ransom through sanction threats", he added, referring to the USA administration.

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Trump's decision to double tariffs on Turkey 'brutal'
Just weeks ago, Trump was reported to have fist-bumped Erdogan during a North Atlantic Treaty Organisation meeting in Brussels. Speaking to supporters in the Black Sea province of Rize late on Thursday, Erdogan again spoke of campaigns against Turkey.

"You dare to sacrifice 81-million Turkey for a priest who is linked to terror groups?", he stressed.

Brunson, who has been held since 2016, faces up to 35 years in prison on charges of allegedly aiding Kurdish separatists and a group that Erdogan blames for a failed 2016 coup attempt against him.

Turkey will "never accept the order, which declares war against the whole world", through the threats of sanctions, he said, referring to the U.S.

A Turkish delegation visited Washington for talks this week but left with no signs of a breakthrough.

Tensions between Turkey and the United States have been high in recent weeks due in part to North Carolina Pastor Andrew Brunson's arrest and detention in the country.

Erdogan, who has called himself the "enemy of interest rates", wants cheap credit from banks to fuel growth, but investors fear the economy is overheating and could be set for a hard landing.

"Interest rates should be kept to a minimum", he added.

Mr. Erdogan's remarks also knocked back investors' expectations of a rate hike from the central bank.

"The dollar also has an edge on the euro amid continuing repatriation of funds to the United States, and the pound looks to keep retreating indefinitely with "no-deal Brexit" the main driver", said Mitsuo Imaizumi, chief FX strategist at Daiwa Securities.

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