Turkey doubled tariffs on some USA imports including cars, alcohol and tobacco on Wednesday in retaliation for US moves, but the lira rallied a further six per cent after a fresh move by banking authorities to underpin the currency.
Jurgen Odenius, economic counsellor at PGIM Fixed Income, said: "The root cause of the crisis lies in a leverage-financed domestic demand boom that increased the external financing requirement of Turkey's corporations, banks, and government ..."
Investors are looking for substantive economic policy changes by Erdogan - namely the acceptance of higher interest rates - whereas the president has so far reacted mainly by blaming foreign powers, particularly the United States, which he says is waging an "economic war".
The Turkish newspaper Hurriyet reported on Wednesday that the Turkish government published a decree that morning imposing tariffs on American "rice, tobacco products, vehicles, alcohol, coal, and cosmetics".
"Escalating the use of Section 232 tariffs on imports from Turkey poses serious risks for the United States", Brilliant said.
After Turkish President Recep Tayyip Erdogan's appeal to boycott US electronic products on Tuesday, Turks started to raise their voices in social media by sharing the list of the USA items from fast food to clothing brands to be boycotted.
Presidential spokesman Ibrahim Kalin claimed Wednesday that a series of measures aimed at shoring up the Turkish currency were taking effect and that he expected the lira to strengthen further.
Dimitris Tsarouhas, an assistant professor in the department of global relations at Bilkent University in Ankara, said: "Turkey remains a North Atlantic Treaty Organisation country and, from a military perspective, this limits its ability to manoeuvre in search of new alliances".
"In the absence of aggressive central bank actions, however, the lira will continue to drop and net capital outflows will continue, " Andy Birch, principal economist at IHS Markit, said.
"President Erdogan appears to be playing a risky game if he thinks he can come out on top in this spat with the USA", he commented.
Meanwhile, it is now only a "dialogue partner" at the Shanghai Cooperation Organisation, the China and Russia-led security bloc, despite Erdogan's declaration of interest in upgrading that status.
Erdogan and Sheikh Tamim also exchanged views on bilateral relations and regional developments during their three-hour meeting, according to Anadolu Agency.
"We request the Turkish gross markets, BIM and A101, not to sell any USA products, including Coca-Cola", read a tweet posted with a hashtag "boycott".
That hasn't prevented Turkish officials from continuing to press their perceived leverage in Brunson.