Erdogan: The collapse of the lira is a conspiracy against Turkey

A Kuwaiti man holds up two-hundred Turkish lira banknotes at a currency exchange in Kuwait City

President Tayyip Erdogan said on Tuesday Turkey would boycott electronic products from the United States, retaliating in a row with Washington that helped drive the lira to record lows. That draws capital away from Turkey, weakening the currency.

But a rapidly falling currency like the Turkish lira undermines that confidence as much more local money is needed to service foreign debt - making default that much more likely.

The lira's weakness has rippled through global markets.

The euro zone has also been hit by Turkish woes, particularly after a report by the Financial Times last week suggested the European Central Bank is increasingly concerned about euro zone banks with exposure to Turkey.

"We will boycott America's electronic products", Erdogan said mentioning that Turkey would produce the better of every product bought with foreign currencies and export them. "If you stand against us with the dollar, we will look for ways to continue our work in other ways", added the Turkish President. Prices are already up 16 percent since previous year, according to the Associated Press.

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He also said that by taking the electric vehicle company private it would end "negative propaganda from shorts". Musk also wrote that the Saudis are interested in the company because they want to diversify away from oil.

In his speech, Erdogan, referring to industrialists, said, "Do not prefer to rush to banks and buy foreign currency". They get revenues in lira, which are worth less and less, but must repay loans in dollars or euros.

Does this have effects outside Turkey?

Liberty Times that four major Taiwanese companies are likely to be on the losing end of investments and ventures in Turkey if the USA sanctions are implemented and maintained for any significant amount of time.

The Turkish strongman also pointed out that Turkey was considering other markets and political alternatives to its "strategic partnership" with Washington.

Such threats will quickly translate into repression against the Turkish working class, which will face the brunt of the economic crisis and the measures that the Erdogan government will take to confront it.

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State Department spokeswoman, said Thursday "When I say 'conversations, ' that can be by phone, that can be my message, that can be by email".

Erdogan, who gained sweeping new powers following his re-election in June, said rumours had been spread that authorities might impose capital controls in response to the slump in the currency, which tumbled as much as 18 percent on Friday alone.

What does this mean for Americans?

But American companies' direct contact with the Turkish economy is quite limited. "We will support him until the end". "Even if all these claims were to be written off-they won't be-the impact on the US banking system would be minimal".

"Turkey does not trigger such a devastating series of crises in other emerging markets that the combined impact could dent growth in the developed world in a meaningful way", said Holger Schmieding, an economist with Berenberg Bank.

Emerging market currencies continued to reel on Tuesday with the South African rand down two percent ZAR=, the Russian rouble dropped 1.4 percent RUB= and the Mexican peso 0.8 percent MXN=. "Argentina and Brazil have been hit", wrote Brad McMillan, chief investment officer for Commonwealth Financial Network, on Friday.

But they said the USA tariff hike on Turkish steel at a time of "considerable stress" tells emerging economies not to expect Washington's help to calm their markets.

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Sarri is also getting Kovacic, who had not played much with Madrid since joining the club in 2015 and had been seeking a transfer. The reward for his patience came when Chelsea chose to meet Athletic's demands after agreeing to let Courtois join Real.

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