Last Updated Aug 10, 2018 2:04 PM EDT
ANKARA, Turkey - The Turkish currency has plunged to an all-time low amid concerns over President Recep Tayyip Erdogan's economic policies persisted and as a dispute with the U.S. showed no sign of subsiding.
The lira hit a record low of 6.24 per dollar on Friday, before recovering to 5.94, down 7 percent on the day. The currency has fallen 66 percent since the start of the year.
High level meetings in Washington between U.S. and Turkish officials over a detained American pastor ended this week without an apparent resolution. Washington imposed financial sanctions on two Turkish ministers and warned of additional measures.
President Donald Trump upped the pressure on Friday, saying in a tweet that he has authorized a doubling of U.S. tariffs on Turkish steel and aluminum imports, to 50 percent and 20 percent, respectively.
"Our relations with Turkey are not good at this time!," he said.
Turkey's trade minister said Turkey is "deeply disappointed" by the decision to raise the tariffs. Ruhsar Pekcan said in a statement the move would not only have an impact on Turkey but affect U.S. companies as well. She called on Trump to return to the negotiating table, saying "this can and should be resolved through dialogue and cooperation."
Erdogan on Thursday portrayed the currency drop as a "campaign" to harm Turkey.
He said: "If they have their dollar, we have the people, we have Allah."
Turkey's government was due to outline a new economic model on Friday as the worries over debt deepened. Erdogan has sought to keep interest rates low to support economic growth, but independent economists say the central bank should be free to raise rates to rein in inflation and help the currency.
Foreign investors could be spooked and try to pull their money out, reinforcing the currency drop and potentially leading to financial instability.
Aylin Ertan, a 43-year-old caterer in Ankara, said she was concerned over the future of her small business.
"The price of the food that I buy increases day by day, the fuel that I put in my car to distribute lunches is more expensive, but I cannot raise my prices from one day to the next," she said. "On some days, I end the day with a loss."
Market analysts warn that Turkey's deteriorating economy could hurt other emerging economies. World stock markets fell Friday, particularly in Europe, as investors worried about the country's financial stability.
Investors are also assessing banks' exposure to the country's currency and budget woes.
Turkey "has continued its spectacular collapse with contagion risks now spilling over to other markets," TD Securities said in a note to clients. "The focus remains on deteriorating politics and its economic implications."