Has the moment finally arrived when political and economic ties between Turkey and the U.S. snap, ending what was a very close partnership dating back to the late 1940s? If it fell much further, it might push a lot of Turkish banks and businesses that had borrowed in dollars into bankruptcy - assuming they did not get bailed out first.
If not, rumours about possibly imposing capital controls on worldwide transfers and even a potential IMF assistance program will continue to grow and likely lead to further pain for the Turkish Lira. Municipal elections are not until April 2019.
"Today's developments have been very negative: President Erdogan made a belligerent speech with no reference to the need of a change of course".
"It is expected that the current account deficit would be balanced at around 4 percent", the ministry said, adding that a saving program in the public sector, which was launched this year, will continue in the medium-term.
Turkish President Recep Tayyip Erdogan said Turks should not be alarmed by exchange rate movements.
Finally, Turkey is also embroiled in a political stalemate with the USA that has signs of spiralling into sanctions and fines between the two North Atlantic Treaty Organisation allies. But Erdogan has consistently sandwiched every moderate statement by his son-in-law with nationalist and populist rhetoric that only undermines investor confidence.
The central bank, nominally independent but never defying Erdogan, appears to have abandoned the conventional monetary policy of using rates hikes as a tool to support the currency and bring down inflation.
Will Diplomatic Tensions Heighten the Currency Challenge?Minutes before Ankara learned about the higher tariffs, the lira had already hit an all-time low of 6.87 against the dollar.
Washington in response sanctioned two Turkish ministers and Trump on Friday announced it was doubling the tariffs on steel and aluminum imports from Turkey, saying relations with Ankara were "not good at this time".
Couple convicted of selling son to pedophiles on dark web
The disturbing case sent shockwaves through the country as authorities were accused of failing to protect the boy. German prosecutors have also gone after other suspected members of the pedophile ring.
Trump intensified the alarm on financial markets with a new tweet on the Turkey row.
USA lawmakers in both parties have expressed outrage in recent years as Erdogan expands his power over the Turkish government while purging political rivals and journalists.
The United States is the biggest destination for Turkish steel exports with 11 per cent of the Turkish export volume.
Data from the Bank of International Settlements indicate that banks' exposure to Turkey is about $82 billion in the case of Spain and $17 billion for Italy, relatively minor figures given that top euro zone banks have combined total assets of more than 20 trillion euros. 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.
Another option is aid from other countries - possibly Qatar or China, an ally in the BRICS group. Erdogan could also entertain help from Qatar, but the benefits of such aid from Doha would be limited. A weaker lira means that the taxes will be less impactful.
"Also completely underestimated is Turkey's capacity to effectively shut down everything that happens in Brussels if they want to, because Brussels works on consensus and nothing, literally nothing happens without consensus", he said.
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.
Presenting the government's new economic model, he said the next steps of rebalancing would entail lowering the current account deficit and improving trust.