Turkey’s president escalated tensions with the US on Tuesday after calling for a boycott of American electronics, amid reports that diplomatic talks have stalled over the issue of a detained pastor.
Showing no signs of backing down in a standoff with President Donald Trump, Recep Tayyip Erdogan suggested that Ankara would stop buying US-made iPhones and buy Korean or Turkish-made models instead.
"If they have the iPhone, there is Samsung elsewhere. We have Vestel," he said, renewing calls for Turks to convert their dollars to lira as the Turkish currency began to rally on Tuesday morning.
However, financial experts questioned whether such a move would have much of an effect given Turkey’s current purchasing power.
Some even pointed to the irony of Mr Erdogan lashing out at American tech companies. The president fended off a coup attempt two years ago by appealing to his supporters via FaceTime, the Apple video chat app.
The country’s finance chief, Mr Erdogan’s son-in-law, is due to address foreign investors later on Tuesday, in an attempt to quell growing concerns.
Andrew Brunson: The evangelical US pastor at the heart of the Turkey crisis
Talks between the two Nato countries seem to have been frozen until Turkey releases American evangelical pastor Andrew Brunson, who stands accused by Ankara of espionage and terrorism related to the 2016 putsch.
John Bolton, White House National Security Adviser, told Turkey’s Ambassador Serdar Kilic in Washington on Monday that there was nothing further to discuss until Mr Brunson was freed.
The US had believed it had agreed a swap deal with Turkey during a Nato summit in July, where Mr Brunson would be released in return for a Turkish actress held by Israel over links to Hamas.
Actress Ebru Özkan was released the next day, while the pastor was moved from prison to house arrest.
Mr Brunson’s lawyer Ismail Cem Halavurt on Tuesday appealed again to a Turkish court to release him and lift his travel ban.
He said the court had up to seven days to decide. Mr Brunson, who faces up to 35 years in jail if found guilty, denies the charges.
The lira started to stage a recovery on Tuesday following its dramatic two-day collapse. After plunging to record lows yesterday, the currency clawed back as much as 9.1 per cent, although it slipped again after Mr Erdogan's remarks on consumer goods.
The earlier rebound was pinned on local investors attempting to cash in on the lira slide by selling their dollars. Retail investors in Turkey are understood to have sold $50m (£39m) to $60m in foreign currency with the jump in the lira exaggerated by thin trading volumes, according to Bloomberg.
Markets were also somewhat soothed by Turkey’s central bank loosening cash buffer requirements for the country’s banks and its finance minister setting up a call with investors.
Despite the lira’s rally, it has still lost 42 per cent of its value against the dollar in 2018.