Then, on Friday, just as the Turkish lira was in a state of free fall, U.S. President Donald Trump helped exacerbate Turkey's problems by announcing dramatically increased tariffs on metal imports from Turkey.
The White House cited national security grounds as the means by which Mr Trump had authorised a 50% steel tariff and 20% aluminium tariff on Turkey.
Turkey sent a delegation to Washington to discuss the trade crisis, but returned with no clear solution, sparking concerns of a widening rift between the nation and the US.
The lira plunged to as low as 6 against the USA dollar on Friday, a day after a Turkish delegation returned from talks in Washington with no apparent solutions to their simmering crisis.
Trump raised the stakes on Friday when he said that his administration would double its tariffs on Turkish steel and aluminum.
"There are various campaigns being carried out".
Some economists were less impressed by the government's handling of the crisis.
Ankara's rocky relations with Washington took a further hit as President Donald Trump lobbed fresh salvoes via Twitter against Turkey, plunging the sagging Turkish lira to new lows against the dollar.
"Don't forget, if they have their dollars, we have our people, our God", he said. We are working hard. "Look at what we were 16 years ago and look at us now", a reference to his terms as prime minister and president.
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"We will not lose the economic war", state-run TRT Haber television quoted Erdogan as saying.
The Australian dollar - often viewed as a proxy for global risk appetite because of its commodity reliance - was the biggest faller among developed currencies, down 1 percent on the day.
Now at a new record low, Turkey's currency has lost more than 40% this year.
Washington imposed the metals tariffs on national security grounds, claiming the glut of steel and aluminum harmed United States companies and the economy.
The lira was trading at 5.95 to the dollar, a loss on the day of 7.5 percent.
The currency has fallen 66 per cent since the start of the year, pushing up the cost of goods for Turkish people and shaking worldwide investors' confidence in the country.
Treasury and Finance Minister Berat Albayrak has vowed to execute Turkey's new economic model together with "all national and worldwide stakeholders", while stressing that a "decisive" approach and the Central Bank's independence would be maintained.
Trump's action on Friday indicates he is willing to use his presidential powers as an economic and diplomatic weapon, even against allies, the Wall Street Journal reported.
Investors are concerned with Erdogan's firm grip on Turkish monetary policy.
Independent analysts argue the central bank should instead raise rates to tame inflation and support the currency.