On Friday that relentless slide turned into a crash: the lira dropped as much as 18 percent, hitting US and European stocks as investors took fright over banks' exposure to Turkey.
The lira fell by a fifth against the dollar last week alone, but "even before the current crisis dropping, the lira was the world's worst performing currency, by nearly 50% against the dollar in the past 12 months", The Guardian reports. "We will be taking the necessary steps with our banks and banking watchdog in a speedy manner".
Turkey and the U.S. are in jeopardy, Turkish President Recep Tayyip Erdogan said, warning the White House he would turn to "new allies" if the United States continues to show a "lack of respect" for his country.
Erdogan also ruled out the possibility of higher interest rates, as they can slow economic growth. The dollar eased against the safe haven yen to 110.65, but was a shade firmer against a basket of currencies at 96.388.
Erdogan won a second term in office in June under a new system of government that gives him sweeping powers.
Indonesia's central bank was also intervening in foreign exchange markets on Monday to defend the rupiah.
In times of high uncertainty, banks tend to shy away from lending to each other.
He said the country's banks and banking regulator "will take the necessary measures quickly".
Simon Derrick, chief currency strategist at BNY Mellon, said that in the absence of a decisive rate hike, "it is hard to look at these announcements as being anything more than temporary calming measures, rather than solutions to the problems at hand".
Monsoon Fury Claims 26 Lives in Kerala; Scores of Dams Opened
Earlier, the United States had issued an advisory, asking its citizens not to visit Kerala because of the flash floods. Prime Minister Narendra Modi spoke with Vijayan yesterday, and offered all possible assistance to those affected.
Investors are turning against emerging markets as the rising prospect of a prolonged trade war compounds a backdrop characterized by a more hawkish Federal Reserve and European Central Bank. As interest rates rise in the USA, investors pull their money out of countries that had enjoyed strong economic growth but are perceived as somewhat riskier.
The Turkish strongman also pointed out that Turkey was considering other markets and political alternatives to its "strategic partnership" with Washington. A few European banks have business there that could lead to losses, but that is not expected to pose a systemic danger to the region.
Mr Albayrak said in an interview published late yesterday that Turkey has drafted a economic action plan and will start implementing it to ease investor concerns.
The dispute with the U.S. has centred on the continued detention of an American pastor who is on trial for espionage and terror-related charges.
American pastor Andrew Brunson, if convicted, faces a jail term of 35 years.
Addressing a conference in Ankara gathering Turkish ambassadors, Mevlut Cavusolgu on Monday called on the United States to "remain loyal to ties based on traditional friendship and North Atlantic Treaty Organisation alliance" with Turkey.
The ministry said Monday it initiated legal investigations against 346 social media accounts "which posted content provoking the dollar exchange rate".
She said destabilization of the Turkish economy would serve no one's interest.
The "law will be applied to those who release fake news about banks, financial institutions and companies that are open to the public", the Turkish Capital Markets Board said in a statement.