Turkey's already fragile economy went into a tailspin when US President Donald Trump announced that Washington was ramping up aluminium and steel tariffs, the latest salvo in an escalating dispute between the North Atlantic Treaty Organisation allies.
The lira tumbled to record lows of 7.24 to the dollar and 8.12 against the euro, recovering slightly after the Turkish Central Bank announced measures aimed at calming the markets, only to fall back again by the end of the day to roughly seven to the dollar.
The lira has been under pressure for weeks over growing concerns about the health of the economy but the currency lost almost a fifth of its value against the dollar on Friday and Monday after US President Donald Trump announced Washington was ramping up aluminium and steel tariffs on Turkey.
"In light of all the turmoil we've seen out of Turkey and the subsequent contagion into other emerging markets, the dollar is pretty much establishing itself as the safe-haven currency", said Bart Wakabayashi, Tokyo branch manager at State Street Bank.
Beyond the bluster of the two world leaders, the spat between the North Atlantic Treaty Organisation allies has exacerbated a financial storm in Turkey.
China's onshore yuan came within a whisker of a 15-month low of 6.8965 per dollar marked early in August after the country's central bank set the weakest mid-point since May 2017 following the dollar's broad surge.
In Washington, White House spokeswoman Sarah Huckabee Sanders called Turkey's actions "certainly regrettable and a step in the wrong direction".
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The White House on Monday said U.S. national security adviser John Bolton met Turkey's ambassador to the United States to discuss the detention of Brunson. Turkey accuses Brunson of being a spy and says he was involved in an attempted coup.
The United States sanctioned Justice Minister Abdulhamit Gul and Interior Minister Suleyman Soylu, blaming both for being involved Brunson's arrest and detention.
Turkish Foreign Minister Mevlut Cavusoglu struck a somewhat conciliatory note, saying Turkey was ready to discuss its issues with the United States as long as there are no threats.
The Turkish lira has lost more than 45 percent of its value this year. "You act on one side as a strategic partner, but on the other you fire bullets into the foot of your strategic partner", he said.
"Rates have gone up by 10 per cent". The lira strengthened some 4 percent against the dollar, to around 5.75 per dollar.
The finance minister will seek to reassure global investors on Thursday in a conference call for which a ministry official said some far 3,000 people had signed up.
Investors have also shown a preference for the greenback based on the expectation that the it will gain at the expense of emerging market currencies dependent on commodity exports.
There was no resolution to the Brunson case in sight.
On Wednesday, a court rejected an appeal for Brunson's release from detention and for a travel ban against him to be lifted, the state-run Anadolu Agency reported. An upper court had yet to rule on the appeal, his lawyer told Reuters.